SURVEYORS in Scotland are predicting growth for the first time in almost a year, despite construction activity continuing to fall in the first few months of 2023.
The findings were revealed in the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor.
A net balance of -6% of Scottish respondents said that workloads fell during the quarter, compared to the net balance +3% of respondents at the UK level. But on a 12-month horizon, Scottish surveyors now expect growth, with +12% expecting workloads to be higher in a year’s time. The last time this indicator was in positive territory was Q2 2022.
In terms of current workloads, private housing experienced the steepest slowdown, a net balance of -21% of respondents reported. Most other sub-sectors were said to have had ‘broadly flat’ workloads other than infrastructure, where a net balance of +14% of respondents said workloads had increased.
Respondents in Scotland expect employment to increase with a net balance of +26% tipping employment levels to be higher in a year’s time. However, skills shortages don’t appear to have eased with shortages of quantity surveyors, bricklayers and other construction professionals continuing to be reported.
Despite labour and material cost pressures, respondents in Scotland seem less concerned about the outlook for profit margins than they were. Whilst the net balance for profit margins was -40% in Q4 2022, this has eased to just -1% in Q1 2023.
Commenting in the report on skills shortages, Andrew Outram from Pacific Partners LLP in Glasgow and Edinburgh said, “More training and encouragement to join the industry for school leavers should be prioritised.”
John Keillor of Currie & Brown in Edinburgh added, “The skills shortage across all parts of the industry will increase as more hit retirement age.”
Ian Simpson from DC Thomson & Co in Dundee said uncertainty over public policy and the future of government support for energy infrastructure was a concern, while Darren McCann, CCG (Scotland) Ltd in Glasgow, commented, “Financial constraints and technical challenges around decarbonisation of existing assets.”
Commenting at UK level Simon Rubinsohn, chief economist, RICS, said, “The negative mood around development has eased somewhat in recent months with the workload trend stabilising away from infrastructure where the trend remains more positive. A key challenge for the sector continues to revolve around labour shortages in general and skills in particular. Unless addressed, this could prove to be a significant drag on the ambitions of the construction industry. “Unsurprisingly, credit conditions remain restrictive for now but there is a sense that they could ease as the year wears on. Whether this improvement materialises remains to be seen in the face of the ongoing banking stress in the US and how this plays out around the globe.”
