Construction holds steady in Yorkshire

Tuesday, 24th April 2018, 7:22 am
Updated Tuesday, 24th April 2018, 9:00 am

Construction workloads in Yorkshire and Humber have remained resilient - despite the impact of the 'Beast from the East' and a pessimistic economic outlook in the first quarter of 2018.

This is according to the results of the Q1 2018 RICS (Royal Institution of Chartered Surveyors) Construction and Infrastructure Market Survey.

In the first quarter of the year, 25 per cent more chartered surveyors in Yorkshire and Humber reported that their workloads had risen as opposed to fallen. While 63 per cent of respondents said bad weather was a limiting factor, the “Beast from the East” was not enough to slow the pace of growth.

Both new work and repair and maintenance activity rose steadily in the early months of 2018. Infrastructure saw the strongest rise in workloads with 24 per cent more respondents seeing an increase in activity (up from 19 per cent in Q4 2017) - the most positive reading since the beginning of 2017.

In the Public Housing sector, 20 per cent more contributors reported a rise in workloads (up from 18 per cent in Q4 2017), whilst in the Private Housing sector activity also increased, with 39 per cent of respondents seeing a rise in workloads (up from 37 per cent in Q4 2017).

However, in the Private Industrial sector, workloads dropped, with eight per cent of respondents reporting a rise in work on such projects (down from 28 per cent back in Q4 2017). Contributors also noted a fall in workloads in the Private Commercial sector, with 21 per cent reporting an increase in work on such projects as opposed to 27 per cent in the last quarter of 2017.

Surveyors in Yorkshire and Humber expect the Energy and Water and Sewage categories to post the most significant increases over the coming 12 months.

Looking ahead, the lack of sufficiently skilled workers remains an obstacle for many businesses in Yorkshire and Humber, particularly professional services, with 70 per cent of respondents reporting a shortage of quantity surveyors.

The shortage of labour, along with higher input costs, continue to restrict growth in profit margins across all regions, and while cost pressures may ease later this year, expectations on profit margins are still well below the three-year average of 40 per cent recorded between 2014 and 2016. Tender prices are expected to rise over the next 12 months with respondents in both the building and civil engineering sectors, envisaging greater price pressures.

However, surveyors in Yorkshire and Humber remain upbeat, with 47 per cent expecting workloads to increase over the next 12-months, and 45 per cent anticipating employment levels to pick-up over the coming year.

Lisa Bowden, Head of Infrastructure in the North at Mace said: “Despite the challenges reported at the start to the year, it is pleasing to see Yorkshire’s construction and infrastructure sectors remain resilient. The importance the government is placing on infrastructure investment is already bearing fruit and with a record £500bn pipeline of investment in national infrastructure, regions like Yorkshire will have an ever-growing role to play in the British economy if we are going to rebalance our country post-Brexit.

“Projects such as the £200m Siemens Rail factory in Goole, expected to start later in the year, as well as longer term infrastructure projects such as Northern Powerhouse Rail, are all critical to the economic success of the region. Companies in the construction and infrastructure sector must champion these opportunities to continue to drive improvements in regional infrastructure, create jobs, and improve productivity.”

Jeffrey Matsu, RICS Senior Economist 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 which will take some time to unwind. Risk aversion by both lenders and developers, in the wake of Carillion and ongoing Brexit negotiation, will continue to weigh on investment decisions.”