The recent RICS UK Construction Monitor reveals no change in construction activity for Q2 2024.
- Workloads remain steady compared to the first quarter, but optimism exists for future growth.
- Infrastructure, especially the energy subsector, remains the strongest aspect despite slight declines.
- Financial constraints and regulatory issues are major barriers to growth, affecting numerous industry players.
- Labour shortages, particularly among surveyors, continue to be a significant challenge.
The latest report from the Royal Institution of Chartered Surveyors (RICS) shows a stable yet stagnant construction market as activity remains unchanged between the first and second quarters of 2024. A net balance of zero indicates consistency with the previous quarter, a marked improvement from the negative trends seen last year. However, this stagnation highlights underlying issues in the construction sector.
Infrastructure emerges as the most robust sector, with a net balance of +13, though this is a slight drop from the previous +17. Within this, the energy subsector leads with a remarkable +35 net balance, showcasing its strength. Conversely, the rail element struggles at a mere +2, indicating varied performance within infrastructure.
Despite the current standstill, there is optimism as +25 of respondents anticipate increased workloads in the coming months. Infrastructure seems poised to lead this growth, with projections suggesting a +34 net balance. Furthermore, private residential development shows promise, with expectations of a turnaround marked by a +25 net balance, which is a significant uplift from its current negative state.
The decline in social housing workloads, moving from a net balance of –2 in Q1 to –7, presents a challenge. However, predictions suggest an overall activity increase, driven by policy changes. Financial constraints remain the most significant barrier, affecting +61 of respondents, while planning and regulatory hurdles impact +58. These figures underscore the need for the recent policy announcements to spur growth.
Labour shortages, while less critical than in previous quarters, still affect +45 of respondents, with the shortage of surveyors being the most pressing gap at 47%. RICS leaders, including chief executive Justin Young, stress the urgency of addressing these shortages to meet set targets for housing and infrastructure. Chief economist Simon Rubinsohn echoes this sentiment, noting the importance of forward-looking policies in overcoming these challenges.
The UK construction sector stands at a critical juncture, requiring strategic interventions to convert cautious optimism into sustained growth.
