Labour shortages holding back West Midlands construction firms
THE RICS UK Construction Market Survey Q1 2015 has revealed that the problem related to material shortages has eased but 63% of respondents now cite labour shortages as the leading restraint on growth.
The number of surveyors reporting concerns over material shortages has declined to 46% in Q1 2015 (down from 60% in Q4 2014) but 63% now cite skill shortages as the number one growth constraint, according to the latest survey carried out by the property sector organisation.
While workloads continue apace across all sectors, in the West Midlands the private sector remains the principal driver of growth, with 54% of respondents reporting a rise in housing workload activity and the housing and infrastructure sectors seeing the strongest rise in workloads in Q1.
Despite overall feedback that profit margins across all projects have tightened, leading to more contractors being selective over projects, in the infrastructure sector respondents reported the highest activity since RICS began recording UK construction market data (Q4 1998).
In particular, the rail and road sub-sectors are where workload momentum is forecast to be highest (at 40% and 30% respective net balances), despite input the costs outpacing profits, with 70% of surveyors in the West Midlands reporting increases in cost prices, but 68% of respondents reporting greater profits.
Andy Irvine, from property consultancy DTZ, said: “Whilst the area is much improved, the ripple effect from SE growth leaves us still behind the curve; although there has been some recent, well publicised inward investment to the region – investors are sort of ‘voting with their feet’.”
Despite all the anecdotal evidence that a degree of uncertainty is entering the market in the count down to the General Election, outward confidence for growth is strong in the West Midlands market, with 79% of respondents expecting their workloads to rise over the next 12 months and to see 3.8% growth in 2015.
