Scottish construction activity continues to grow despite challenges


WORKLOADS in the Scottish construction continued to grow ‘solidly’ in Q2 2022 but expectations for the year ahead moderated as issues with skills, costs and credit conditions weigh on firms, according to the latest RICS Construction & Infrastructure Monitor.

Looking at the all-sector level, +19% of respondents in Scotland reported a rise in workloads in Q2, down slightly from +22% in Q1. Workload growth is widespread but is particularly strong with regard to infrastructure activity, with 50% more respondents reporting a rise in infrastructure workloads than reporting a fall (up from +34%).

Private housing workload growth, on the other hand, moderated to +18% from +28% previously.

With the relative strength in current workloads, the impact of labour shortages is being felt across much of the industry. Respondents reported shortages across all professionalisms in the sector, with 65% reporting shortages of quantity surveyors, 55% reporting shortages of other professionals, and 62% reporting shortages of bricklayers.

RICS said that, looking ahead, 12-month expectations for construction workloads in Scotland remain ‘positive’, albeit less so than before. A net balance of +25% of respondents in Scotland now expects workloads to rise over the year ahead, compared to +34% previously.

It added that, with escalating labour and material cost pressures, respondents in Scotland remain relatively downbeat about the outlook for profit margins. Q2 was the fourth quarter in succession that there was a negative net balance regarding the 12-month outlook for profitability, albeit only slightly so.

Steven Hyde of D Blake & Co in Edinburgh said that difficulty recruiting new trainees into the workforce is presenting a ‘challenge with regard to available skills’. Whilst James Robert Wright of Survey UK Limited in Edinburgh said that many trades and sub-contractors are ‘busy’ on residential projects, impacting on their availability for other work. Eric Gordon of 3C Construction Cost Consultants in Blanefield added, “The lack of estimators sometimes limits the number of contractors suitable for tendering.”

RICS Chief Economist, Simon Rubinsohn, commented, “Feedback from RICS members suggests construction activity remains firm and that it is likely to continue to grow solidly over the coming year despite broader macro challenges. However increasing concerns are beginning to be expressed about the deterioration in credit conditions particularly for smaller businesses in the sector which is also now visible in the worsening insolvency data.

“Despite this, the sector continues to grapple with challenges around recruitment. And unsurprisingly, it is in the area of skilled trades where this shortfall is most intense.”