Labour supply issues are the biggest factor limiting the growth of construction activity in Wales, according to The Royal Institution of Chartered Surveyors (RICS) Construction Monitor.

Respondents to the latest survey point to ongoing increases in construction activity, but over 70% say that skills shortages are limiting the sector’s ability to take on more work.

A net balance of 11% of respondents in Wales said that construction workloads increased in the first quarter of the year. This growth was almost entirely driven by publicly funded house-building and other public sector works. Meanwhile falls in private house-building and private commercial construction were reported.

Looking ahead, a net balance of 12% of respondents in Wales expects workloads to rise over the next year, up from -4% the quarter previous. This is in line with the UK level, where a net balance of 15% of surveyors expects workloads to rise. Meanwhile a net balance of +17% of Welsh respondents expects employment levels to increase over the next year.

However, with skills shortages being reported across the industry, it will be challenging for firms to meet an increased employment need. In the current report, 67% reported a shortage in quantity surveyors, 54% reported a shortage in other construction professionals and 61% reported a shortage in bricklayers. Anecdotally, respondents also say that there aren’t enough contractors to meet current demand.

Hugh Stephen Pritchard MRICS based in Benllech commented:

“Significant increases in labour and material costs are a challenge and there is also a shortage of available labour”.

Simon M Davies of Simon Davies in Swansea said:

“Demand for building contractors is outstripping the supply of available contractors”.

Terence Jones of Terry Jones CQS Ltd in Swansea said:

“Inflation over the last 12 months has made contractors cautious.”

Commenting at UK level Simon Rubinsohn, Chief Economist, RICS, said:

 “The negative mood around development has eased somewhat in recent months with the workload trend stabilising away from infrastructure where the trend remains more positive. A key challenge for the sector continues to revolve around labour shortages in general and skills in particular. Unless addressed, this could prove to be a significant drag on the ambitions of the construction industry.

“Unsurprisingly, credit conditions remain restrictive for now but there is a sense that they could ease as the year wears on. Whether this improvement materialises remains to be seen in the face of the ongoing banking stress in the US and how this plays out around the globe.”