Survey highlights flatlining in construction activity

Construction activity flatlined in the fourth quarter of 2022, according to a Royal Institution of Chartered Surveyors survey.

The organisation’s construction monitor found that headline workloads across all sectors of the construction industry contracted by a net balance of 1 per cent, compared to seeing 17 per cent growth in the third quarter and 30 per cent in the three months preceding that.

The most significant contributor to the fall came from the private-housing sector, where workloads slipped by 13 per cent against a 17 per cent increase in the previous quarter.

The data reflects warnings posted yesterday from Britain’s biggest housebuilder Barratt Developments, which said it had seen a 40 per cent drop in reservations for new homes in recent months. The housebuilder added it expected a marked drop in activity in the housing sector in coming months.

While the RICS survey found a slight decline in companies experiencing labour and materials shortages, two-thirds cited financial constraints as a major business obstacle – the highest level since the third quarter of 2020.

A net balance of 46 per cent of survey respondents indicated that credit conditions had worsened over the past three months, with a similar amount anticipating a further deterioration over the next three months, the body said.

RICS chief economist Simon Rubinsohn said: “While the more challenging macro environment is beginning to impact parts of the construction sector, it is noteworthy that the forward-looking metrics, even in the area of private residential development, remain relatively resilient for now, with housing workloads only seen as likely to slow modestly over the next year.

“Meanwhile, a series of significant energy and transport projects are continuing to support infrastructure workloads. Significantly, the industry is continuing to grapple with the challenge around finding adequate supplies of skilled labour, both at a professional and trades level. Addressing this issue will be critical in enabling the sector to play a comprehensive role in supporting the economy as it emerges from the current downturn.”