Labour shortages, costs, and credit conditions are challenging the Scottish construction sector, after it continued to grow in quarter two of the year.
According to the RICS construction and infrastructure monitor, 19% of respondents in Scotland reported a rise in workloads, down slightly from 22% in quarter one.
A quarter of respondents in Scotland also expect workloads to rise over the year ahead, compared to 34% previously.
However, the impact of labour shortages is being felt across much of the industry.
Respondents reported shortages across all professionalisms in the sector, with 65% reporting shortages of quantity surveyors, 55% reporting shortages of other professionals, and 62% reporting shortages of bricklayers.
With escalating labour and material cost pressures, respondents in Scotland remain relatively downbeat about the outlook for profit margins.
Quarter two was the fourth quarter in succession that there was a negative net balance regarding the 12-month outlook for profitability, albeit only slightly so.
Steven Hyde of D Blake & Co in Edinburgh said that difficulty recruiting new trainees into the workforce is presenting a challenge with regard to available skills.
James Robert Wright of Survey UK Limited in Edinburgh said that many trades and sub-contractors are busy on residential projects, impacting on their availability for other work.
Eric Gordon of 3C Construction Cost Consultants in Blanefield added: “The lack of estimators sometimes limits the number of contractors suitable for tendering.”
RICS chief economist, Simon Rubinsohn, said: “Feedback from RICS members suggests construction activity remains firm and that it is likely to continue to grow solidly over the coming year despite broader macro challenges.
“However increasing concerns are beginning to be expressed about the deterioration in credit conditions particularly for smaller businesses in the sector which is also now visible in the worsening insolvency data.
“Despite this, the sector continues to grapple with challenges around recruitment. And unsurprisingly, it is in the area of skilled trades where this shortfall is most intense.”
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