Overall construction activity in Wales was subdued through the second quarter of the year according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor, but surveyors appear more optimistic for the year ahead.
A net balance of 3% of survey respondents in Wales reported a rise in overall construction activity. Although this balance was broadly flat, it was an improvement after three consecutive quarters where this figure was in negative territory.
Looking at the subsectors, activity across private housing and infrastructure was reported to have been flat. Private commercial activity fell through Q2 (a net balance of -7%), as did activity across the private industrial sector (a net balance of -23%). Private housebuilding activity saw a rise in workloads (a net balance of 13%), as well as “other public works” (a net balance of 12%).
Respondents in Wales are more optimistic for the year ahead. A net balance of 19% anticipate that workloads will rise over the next 12-months, up from the net balance of 5% seen in the Q1 report.
And on the outlook for profit margins, whilst pressures remain, these appear not as acute as seen before. A net balance of -5% of respondents in Wales expects that profit margins will fall over the next year, and whilst remaining in negative territory, it's up from the net balance of -44% seen in the survey prior.
Surveyors in Wales report that skills shortages have worsened through the second quarter of the year. 65% of respondents noted that there is a shortage in quantity surveyors, up from the 55% seen in the Q1 survey, 59% report the need for more bricklayers, compared to the 43% noted in the survey previous and 36% say there's a shortage of construction professionals which is a similar figure to the 38% that reported a shortage earlier this year.
Survey respondent Jayne Rowland Evans of GKR Maintenance & Building Co Ltd in Caerphilly said:
“There is a lack of tenders. Procurement requirements and SSIP are ever-increasing and difficult for SMEs who do not have dedicated departments.”
Survey respondent Matt Potter of MJP quantity Surveying in Aberystwyth said:
“Unstable and volatile world policies forcing prices of raw materials up, which has an impact on all supply chains.”
Julian Thorpe of Bay Quantity Surveyors Ltd of Swansea added that there is a lack of trained QSs and apprenticeships.
Commenting on the UK picture, Simon Rubinsohn, RICS Chief Economist, said:
“The latest results continue to demonstrate the ongoing challenges facing much of the construction industry. Rising material costs are exacerbating existing financial hurdles and being reflected in further pressure on profit margins. Infrastructure continues to show a degree of resilience with workloads benefiting from a number of substantive projects. However, there is little evidence of any improvement in sentiment in the housebuilding sector, highlighting the predicament the new Prime Minister faces in trying to reignite building activity and oversee a sharp uplift in the delivery of social housing. Aside from the headwinds provided by viability, respondents are continuing to point to regulatory barriers impeding the development timeline with problems around the building safety regulator still being frequently cited despite some improvements in the process.
