Construction workloads in Yorkshire and Humber are still healthy – but activity slowed down during the second quarter of the year.
The latest construction market survey from the Royal Institution of Chartered Surveyors (RICS), said a “flatter” picture was visible across all sectors.
Some 19% more construction professionals in the region reported a rise in activity over the previous three months compared with 34% in the first quarter of the year.
The slowdown was most marked in the private commercial, industrial and housing sectors. However, 27% more contributors still reported a rise in private housing activity – down from 45% in the first quarter – while 25% more respondents saw their workloads in the private commercial sector rise rather than fall in the second quarter.
Significantly, for the second successive quarter, the biggest constraint on output according to respondents is finance and a lack of funding – with 64% highlighting this as the principal challenge. Planning and regulatory delays also remain a key issue with 60% of respondents citing that these are constraining growth.
Skills shortages also remain a problem for Yorkshire and Humber’s construction market. Some 63% of the region’s construction professionals reported a short supply of quantity surveyors closely followed by a lack of bricklayers at 59%.
Uncertain prospects for the economy following the Brexit vote have led to a less optimistic outlook for the sector over the year ahead.
However, 27% more contributors still expect activity to rise in Yorkshire and Humber’s construction market rather than fall over this period. On average, contributors foresee their workloads increasing by 1% over the coming 12 months, down from the 2.3% growth predicted in the first quarter. Expectations for employment growth have also moderated significantly with a rise of 0.1% anticipated, down from 1.5% the previous quarter.
Aside from in Scotland, respondents in all other parts of the UK continue to report a rise in workloads.
Chris Campbell, chairman of the RICS Yorkshire & Humber quantity surveyors and construction group, said: “The recent referendum to leave the EU caused a hiatus in investment for many of our private clients. But overall it is too early to estimate or forecast with confidence what impact Brexit will have on the construction sector and when any effect will be felt.
“The market is still buoyant, with good levels of activity; however more skilled professionals and improved funding models would improve it further.”
Simon Rubinsohn, RICS chief economist, said: “The latest results from our construction market survey suggest that the second quarter of the year saw a further moderation in the growth trend which is not altogether surprising given the build-up to the EU referendum.
“Significantly, the biggest issue at the present time alongside uncertainty looks to be credit constraints with over two-thirds of contributors highlighting this issue as a concern.
“Encouragingly, the swift actions of the Bank of England in creating additional capacity for the banking sector to provide funding to meet demand should help alleviate some of this pressure.
“Nevertheless, anecdotal evidence does indicate that the challenge for the British government in establishing a new relationship with the EU could see some investment plans in the construction sector scaled back.”