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RICS: Snowstorms had no impact on Q1 workloads

Construction workloads held up in the first three months of the year but financial constraints continue to limit expansion, according to the Royal Institution of Chartered Surveyors.

RICS’ construction and infrastructure market survey showed activity increased in the first three months of 2018, despite of bad weather in February and March.

A net balance of 23 per cent of surveyors reported workloads rising in the first quarter of 2018, compared with 21 per cent in the final quarter of 2017.

This marked the fourth consecutive quarter in which surveyors reported increased workloads.

RICS senior economist Jeffrey Matsu said: “While a short-lived snowstorm may have snarled logistical supply chains and site works at the end of February, it was not enough to negatively impact on workload order books.

“Indeed, several years of limited spare capacity have resulted in a backlog within the delivery pipeline that will take some time to unwind.”

Financial constraints, including accessing cash to fund works, was cited as the main factor restricting activity, with 76 per cent of firms having trouble in this area.

Caution among clients following Carillon’s collapse and continued Brexit-related uncertainty were said to be “weighing on investment decisions”.

Willmott Dixon managing director for construction in the North Anthony Dillon said: “Following the Carillion demise clients are looking in far greater detail at the strength of balance sheets prior to contract.”

Cushman Wakefield partner Andy Irvine added: ”The ‘Carillion effect’ is very noticeable […] it introduces the ‘who’s next’ syndrome, adding further unease into the general arena as opposed to opportunity.”

Despite these concerns, a net balance of 46 per cent of surveyors expected to see workloads increase over the next 12 months.

Increasing demand is exacerbating labour shortages. however, which was cited as a problem by almost two-thirds of those questioned.

This is set to worsen, as 35 per cent expected employment levels to grow over the next year.

Higher labour costs are also set to increase pricing pressure, with 63 per cent in the building sector and 57 per cent in the civils sector expecting tender prices to rise over the next 12 months.

RICS’ outlook contrasts with recent data from the Office for National Statistics, which showed output falling for a fourth consecutive period in February, and the Markit/ CIPS PMI data for March, which showed activity contracting for the first time since September.

Earlier this week Creditsafe’s Watchdog report showed that construction firm insolvencies had jumped 73 per cent in the first quarter of the year compared with the last quarter of 2017.

 

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