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Construction works remain strong despite price inflation and labour shortages

Supply chain disruption, material price inflation and a shortage of skilled labour continued to intensify in Q3 2021, which could challenge strong workloads led by new infrastructure schemes underway across the UK, according to a survey of experts and professionals working in the construction sector by the Royal Institution of Chartered Surveyors (RICS).

While the pace of total activity slipped slightly from +38% in Q2 to +33% in Q3, respondents are reporting strong levels of construction work, which is mostly led by infrastructure projects (+47% in Q3 from +45% in Q2) – with energy, roads and water revealing the strongest outputs. Forward-looking indicators point to the sector continuing to experience strong growth over the course of the next twelve months.

Unsurprisingly, private commercial (such as office and retail developments) showed the slowest uplift in activity, but the +19% net balance indicates that even this area is seeing business improve and projects resume.

The availability of construction materials was the biggest challenge cited amongst respondents as supply chains across the UK struggled to re-establish themselves post-Brexit and the pandemic. In the final quarter of 2019, just 14% of respondents indicated that this was an issue for them. Fast forward to Q2 2021 and it had jumped to over half of all respondents identifying this issue and, since then, it has continued the rise.

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