Construction Workloads to Pick Up in Wales, but Surveyors Expect Profit Margins to be Squeezed

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Construction workloads in Wales rose in Q3 for the third consecutive quarter, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor, with public housing workloads rising fastest out of all subsectors.

A net balance of 13% of surveyors in Wales reported that workloads rose with all subsectors seeing growth apart from private housing activity which was reported to have declined (a net balance of -10%), and other public works which fell flat.

A net balance of 26% saw a rise in public housing activity, 6% in private industrial, 10% in infrastructure and 9% in private commercial.

Surveyors in Wales remain optimistic about future workloads too, with a net balance of 26% of respondents expecting an increase over the next year. This is the third consecutive quarter this balance has been in positive territory, and just above the UK average which sits at a net balance of 24%.

Profit margins though are expected to fall over the next 12 months. A net balance of -11% of surveyors in Wales anticipate that profit margins will decline, down from 10% that was seen in Q2.

Welsh surveyors continue to report shortages in skilled workers, however less so in some professions than noted previously. 50% report a shortage in quantity surveyors, down from 55% in Q2, and 39% note a shortfall in other construction professionals down from 48%. However, 59% report a deficit in bricklayers, up from 51% in the second quarter of the year.

Neil Taylor of Hafod Housing Association in South Wales commented:

“The planning process is still the most significant point of failure, whilst the Labour party have indicated that planning reform is a priority this will take time to implement.”

Commenting on the UK picture, RICS Senior Economist, Tarrant Parsons, commented:

“These results show some encouraging signs of improvement for the UK construction industry as we move into the final quarter of the year. While growth prospects for the next twelve months appear to be brightening, challenges persist, particularly around tight profit margins across the industry and ongoing skills shortages. Industry professionals anticipate an improvement in credit conditions over the year ahead, which should provide a much-needed boost to industry confidence”.

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