Despite ongoing financial constraints and the skills shortage, confidence in the UK construction sector seems to be cautiously growing, reports RICS
Hopes and confidence for the UK construction sector seem to be growing, as belief in a rate cut in 2024 appears to be supporting greater expectations for the future.
According to the latest RICS UK Construction Monitor, Q4 2023, most key metrics show caution in the face of moderate upticks.
Pessimism was alleviated by moderate growth in infrastructure workloads, but housing activity fell.
Private and public housing workloads deteriorated considerably in Q4
Year-long concerns about the housing market continue, with private housing workloads remaining in negative territory (-21%), and public housing dropping by -7% to -14% this quarter.
Brightening work trends overall were observed, with headline figures now recording a -8% figure, which is marginally stronger than the -10% recorded in Q3. Infrastructure led the charge, with a +9% growth reading.
Rebalancing pressures around the skills shortage
The skills shortage remains a key obstacle to confidence in the UK construction sector.
High numbers of those assessed reported problems recruiting sufficient skilled trade workers. Demand for quantity and building surveyors was also high.
Apprenticeships, incentives and a Government-skills taskforce have all been proposed as targets for increased investment to answer the skills shortage.
Younger people specifically could benefit from a dedicated English Built Environment GCSE, which RICS is ready and willing to help develop.
However, there are positive signs of the industry rising to the need for more training, with +19% report a rise in planned investment in training, which is slightly up on the +17% reported in Q3.
Anticipated interest rate cuts will also soften adverse conditions
Rate cuts in interest in 2024, speculated to be delivered by the Bank of England around the Spring Budget, have led to the
RICS senior economist Tarrant Parsons said: “Although current conditions across the UK construction industry remain relatively subdued, the latest survey feedback shows a gradual improvement in forward-looking sentiment. Supported by the prospect of easing interest rates later this year, overall workloads are anticipated to rise, with respondents anticipating this pick-up will be accompanied by a rise in employment levels across the industry. That said, the challenge around existing skills shortages remains a persistent theme in the Q4 results.”
You can read the RIC’s analysis of confidence in UK construction here.
