Workloads in the Scottish construction sector continued to grow solidly in the second quarter, but expectations for the year ahead moderated as issues with skills, costs and credit conditions weigh on firms.
That’s according to the latest Royal Institution of Chartered Surveyors (RICS) Construction & Infrastructure Monitor , which also showed that 19% of survey respondents in Scotland reported a rise in workloads, down slightly from 22% in the first quarter.
Workload growth is widespread, but is particularly strong with regard to infrastructure activity, with 50% more respondents reporting a rise in infrastructure workloads than reporting a fall - up from 34%.
Private housing workload growth on the other hand moderated to 18%, from 28% previously.
With the relative strength in current workloads, the impact of labour shortages is being felt across much of the industry.
Respondents have reported shortages across all professionalisms in the sector, with 65% reporting shortages of quantity surveyors, 55% reporting shortages of other professionals, and 62% reporting shortages of bricklayers.
Looking ahead, 12-month expectations for construction workloads in Scotland remain positive, albeit less so than before.
A net balance of 25% of respondents in Scotland now expects workloads to rise over the year ahead, compared to 34% previously.
With escalating labour and material cost pressures, respondents in Scotland remain relatively downbeat about the outlook for profit margins. The second quarter was the fourth in succession that there was a negative net balance regarding the 12-month outlook for profitability; albeit only slightly so.
Steven Hyde, a quantity surveyor at D Blake & Co in Edinburgh, said that difficulty recruiting new trainees into the workforce is presenting a challenge, while Survey UK managing director James Robert Wright said that many trades and sub-contractors are busy on residential projects, impacting on their availability for other work.
Eric Gordon, director at 3C Construction Cost Consultants in Blanefield, added: “The lack of estimators sometimes limits the number of contractors suitable for tendering.”
RICS chief economist Simon Rubinsohn commented: “Feedback from RICS members suggests construction activity remains firm and that it is likely to continue to grow solidly over the coming year despite broader macro challenges.
“However, increasing concerns are beginning to be expressed about the deterioration in credit conditions particularly for smaller businesses in the sector which is also now visible in the worsening insolvency data.
“Despite this, the sector continues to grapple with challenges around recruitment - and unsurprisingly, it is in the area of skilled trades where this shortfall is most intense.”
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