Construction: The lowdown on the slowdown
Skills shortages in the UK building industry have fallen to their lowest level in five years, shows the latest construction survey from RICS (Royal Institution of Chartered Surveyors) published today (1 July).
The DTI recently revised construction figures downwards substantially. However, the RICS survey indicates the sector continues to grow, though at a slower pace. 15% more chartered quantity surveyors report a rise than a fall in workloads for the second quarter, down from 18% in the first.
Either way there is a slowdown occurring. Less readily available work means more readily available labour, though the fall in skills shortages may be partially explained by an increasingly fluid foreign labour market.
Rising materials prices and greater economic uncertainty have dented optimism and expected profit margins. Steel prices have risen over recent years and cement saw production and delivery costs rise sharply at the beginning of the year.
RICS Building Cost Information Service (BCIS) shows an 8.5% rise in overall materials costs between first quarter 2004 and first quarter 2005. Fuel prices have also had an impact.
However, looking ahead to next year, chartered surveyors’ confidence has decreased only marginally.
RICS chief economist Milan Khatri said:
"Growth in the UK construction industry is slowing, but opinion as to how much and how fast differs substantially. Public spending is expected to grow at a fairly rapid pace over the next year which will support the UK industry, but the wider economic climate has certainly cooled."