Expectations of region’s construction sector regains lost ground post Brexit vote

Expectations across Yorkshire and Humber’s construction sector have now regained the ground lost post the EU vote.

According to the latest Royal Institution of Chartered Surveyors (RICS) Construction Market Survey, Q4 2016, following a noticeable dip around the time of the EU referendum, expectations for output growth in the region’s construction sector over the year to come have strengthened.

Forty-four per cent more of the region’s chartered surveyors expecting workloads to increase over the coming 12 months.

Alongside this, employment expectations improved during the last quarter of 2016 (Q4 2016), with 48% of the region’s respondents anticipating a rise in construction sector employment over the year to come.

The latest results point to modest growth across the sector in the final quarter of 2016, with 37% more respondents reporting an increase in workloads. However, while the data is broadly positive, the anecdotal comments left by Yorkshire and Humber’s chartered surveyors – in the construction sector – do continue to highlight uncertainty surrounding the departure from the EU to be dampening investment and activity.

During Q4, output increased in most sub sectors in Yorkshire and Humber except private industrial.  The strongest quarterly rise in workloads was reported in the region’s private commercial sector with 51% of respondents reporting a rise in activity (up from 41% in the previous quarter), followed by private housing, with 45% of respondents seeing a rise in workloads (up from 31% in Q3).

David Bishop of DBA Project and Cost Consultancy in Doncaster said: “Contractors are reporting they are becoming more selective in bidding due to the volume of tendered opportunities.”

Over the next twelve months, 33% of Yorkshire and Humber’s construction chartered surveyors expect the road and rail sub categories of infrastructure to post the most significant increases in construction output.

Skills shortages continue to be a key impediment to growth in the region’s construction sector, although they eased slightly in the last quarter of 2016, with 50% of respondents reporting a shortage of labour (down from 57% in Q3).  

Geoff White, policy manager at RICS North & Midlands, said: “Many firms are currently having to bring construction professionals in from outside the UK.  The lack of quantity surveyors consistently apparent in our survey is also underscored by the fact that, at the moment, under the government’s Shortage Occupation List, it is easier to employ a ballet dancer than a quantity surveyor.  

“Even if we were to reverse this and also ensure that through Brexit we maintain access to EU workforce, we would still have a domestic shortfall of skills. The Industrial Strategy is a golden opportunity to align education, training and employer work paths – along with modern methods of construction – to ensure we have the skilled workforce to meet our building targets.”
 
Simon Rubinsohn, RICS chief economist, adds: “The latest results suggest that the construction sector has shrugged off concerns about the effect of Brexit with key workload indicators remaining firm around the country. Indeed, feedback regarding the outlook over the next twelve months is now rosier than it was back in the autumn with more building anticipated as 2017 unfolds.
“That said, there remains some unease about access to skilled labour in the emerging new world and financial constraints still remain a major challenge for many businesses. And significantly, we are being told that a shortage of quantity surveyors is impacting on the development process at the present time.”