The pace of increased workloads in the UK construction market continued to slow during the second quarter of 2016, according to the latest report by the Royal Institution of Chartered Surveyors (RICS), named RICS UK Construction Market Survey.

The survey was collected after 24 June, meaning all responses were gathered after Britain’s decision to leave the European Union on 23 June.

The survey found that 17% more respondents reported a rise in activity over the previous three months compared with 28% in the first quarter, with the most pronounced slowdowns being seen in the private commercial, industrial and housing segments.

However, 27% more contributors reported a rise in private housing activity - down from 36% in the first quarter of 2016 - while 17% more respondents saw their workloads in the private commercial sector rise rather than fall in the second quarter of 2016.

RICS reported that, for the second successive quarter, the biggest constraint on output according to respondents was finance, as more than two-third of contributors highlighted this as the principal challenge.

It said that 36% of respondents reported that a lack of funding was restricting new developments. Meanwhile, planning and regulatory delays also remain a key issue, according to the survey, with 60% of respondents citing that these are constraining growth.

Alongside the slowdown in activity in the second quarter of 2016, skills shortages also remained a problem, with 56% of contributors reporting that a lack of appropriately skilled labour was a constraint on growth. Bricklayers and quantity surveyors remain in particularly short supply with 59% and 57% of respondents citing difficulties in these areas.

RICS said that more uncertain prospects for the economy had led to a less optimistic outlook for the sector over the year ahead.

It said that, putting this in perspective, 23% of contributors still expected activity to rise rather than fall over this period. On average, according to RICS, contributors foresee their workloads increasing by 1% over the coming 12 months, down from the 2.8% growth predicted in the first quarter of 2016.

Expectations for employment growth have also moderated significantly with a rise of 0.6% expected, down from 2% the previous quarter.

Aside from in Scotland, where activity stalled compared to the first quarter of 2016, respondents in all other parts of the UK continue to report a rise in workloads.

Simon Rubinsohn, RICS chief economist, said, “The latest results from the RICS 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.”

He added that, encouragingly, the swift actions of the Bank of England in creating additional capacity for the banking sector would help alleviate some of this pressure.

He said that it is likely 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.


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