Site icon Daily Business

Construction sector activity ‘deteriorating’

Construction, housebuilding
Construction outlook across Scotland is deteriorating, says RICS (pic: Terry Murden)

The marked slowdown in the Scottish construction market continued in the latest quarter, with surveyors now pointing to the weakest period of growth since the beginning of last year.

A net balance of +10% of Scottish respondents said that workloads grew, compared to +19% in Q2 and +39% just five quarters ago, according to the RICS Construction & Infrastructure Monitor for Q3.

This trend of a slowdown in activity corresponds with a deterioration in the outlook too. Expectations for the year ahead fell to their lowest level since the beginning of the pandemic as issues with skills, costs and credit conditions weigh on firms.

All sub-sectors other than private commercial saw growth in Q3. However, the growth that is being reported is slower. In private housing workloads, a net balance of +15% said that there was a rise in Q3, but this was down from +18% in Q2 and +37% at the end of last year.

The major challenges facing firms at present continue to be material shortages / costs and labour shortages. 60% of respondents reported shortages of quantity surveyors, 62% reported shortages of other professionals, and 59% reported shortages of bricklayers.

With escalating labour and material cost pressures, respondents in Scotland remain relatively downbeat about the outlook for profit margins.

Q3 was the fifth quarter in succession that there was a negative net balance regarding the 12-month outlook for profitability, with -26% expecting profit margins to decline, down from -2% in Q2.

Exit mobile version