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RICS: UK housebuilding driving a construction industry revival

The UK private housing sector is driving a construction industry revival, although skills shortages threaten the pace of recovery, according to the latest Construction Market Survey from the Royal Institution of Chartered Surveyors.

The survey, which covers the first quarter of 2014, explains that the speed at which confidence is returning to the market is revealed by the fastest rate of growth in workloads since the Construction Market survey began in 1994.

Improvement is being driven by the private sector and, in particular, the commercial housing sector over the next 12 months. Most significantly, the effects are expected to be felt across the whole of the UK, rather than exclusively reserved to the London and South East hotspots.

However, the feel good factor is being tempered by a further increase in reported skills shortages across many trades and in most parts of the country.

Furthermore, the national pictures shows 41% of respondents believe there are insufficient numbers of quantity surveyors currently available to meet rising supply demands for these skilled workers.

Despite this, the continuing recovery in output in the sector will see further job gains with respondents forecasting a 3% year on year growth in the employment footprint, an additional 62,000 new employees being recruited into the construction industry.

‘Clearly what we are seeing as the recovery takes shape, is that the impact of skills shortages in parts of the country where companies failed to invest in attracting new talent or in the training of existing employees at the height of the economic downturn,’ said Alan Muse, RICS director of built environment.

‘Now that the industry is experiencing an upturn in workload that is broadening out across the whole of the UK, it must ensure it has the capability to capitalise on these opportunities,’ he added.

The report points out that private housing workloads have continued the improvement that began in the fourth quarter of 2012 with the sector’s workloads net balance reaching 52 in the first three months of 2014, up from 48 the previous quarter.

The net balance of private commercial workloads grew to 55 in the first quarter and, as was the case in the private housing sector, activity increased across all of the UK. In the industrial sector, the workloads net balance climbed to 40 from last quarter’s reading of 31.

Taken together, the private housing, commercial and industrial sectors represent approximately half of UK construction output, so the strength of the RICS indicators is a promising sign for the industry.

Indeed, respondents confidence in further future growth in workloads increased again in the first quarter with the RICS 12 month Workload Expectations net balance reaching a series high value of 77.

On average, respondents expect workloads to expand by a further 3.8% over the coming year. Expectations for employment growth are equally positive with the RICS Employment Expectations series creeping above last quarter's high to reach 56.

Respondents now envisage headcounts in the industry increasing by roughly 3% over the year. With about 2.12 million employed in the sector, this roughly translates into about 64,000 more jobs created over the next 12 months.

It also says that financial constraints remain the single biggest restriction on activity with 68% stating that it was holding back construction output, although this proportion has been falling gradually over the last year or so.

Adverse weather conditions were reported as a substantial impediment on further growth in the first quarter with 53% of respondents reporting such problems. Labour shortages are becoming a growing concern with 41% of respondents having difficulties sourcing skills across a range of disciplines.

Source : PropertyWire

24 April 2014
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