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Construction Growth Placing New Pressure on Labour and Supply Chains

The construction supply chain struggled to keep up with increasing new housing and infrastructure across the UK, the RICS Construction and Infrastructure Survey has found for Q2 2021. With total workloads showing strong growth after +38% (net balance) of respondents reported a rise, there were also problems reported with the cost of materials and a shortage of staff to deliver projects.

Growth in the private residential sector continued to lead the construction market, with +50% of respondents reporting an increase in activity (up from +39% in the previous quarter and the strongest reading in the last six years).

While respondents indicated the construction sector is now broadly recovering well from the pandemic, constraints on the market’s return to normality were also becoming apparent. 82% of respondents pointed to a shortage of materials hampering the market during Q2, up from 57% previously. Moreover, the cost of materials is expected to increase by nearly 10% over the next 12 months, with these projections running ahead of the 7% growth anticipated for tender prices.  

The Q2 survey also picked up concerns around labour shortages – both for skilled labour and ‘white-collar’ roles – with a net balance of +64% saying a lack of labour will limit new activity (up from +42% in the previous quarter). As an example, in the case of bricklayers this has jumped from 34% to 58% while for carpenters it has increased from 33% to 55%.

Looking at next year, respondents predict construction workloads will continue to gather pace, with a net balance of +55% saying more activity is expected (the highest since early 2016) – with new infrastructure and residential expected to continue leading.

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