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Challenging macro environment causes most construction workloads to flat line while infrastructure and recruitment prove resilient

THE Royal Institution of Chartered Surveyors (RICS) UK Construction Monitor for Q4 2022 demonstrates the impact of the challenging macro environment on the sector, with construction workloads at the all sector level flat lining. Within this overall figure, infrastructure continues to show a more positive trend supported by major energy and transport projects.

This quarter, headline workloads (workloads across all sectors) dropped to a net balance of -1% according to respondents to the survey, compared to +17% in Q3 and +30% in Q2 of 2022. The most significant contributor to the turnaround in the trend from positive to negative, comes from the private housing sector, where workloads slipped to -13% against +17% in Q3. Other components of the private development sector were also a little flatter this quarter with the metric for commercial and industrial also turning very slightly negative (net balance of -2%). The contrast to this is provided by the infrastructure component where the workload trend remains more upbeat reflecting the longer-term nature of many of these projects (+22%).

Regarding the industry's crucial challenges, respondents continue to emphasise shortages of both labour and materials. However, while the number of respondents highlighting these factors are beginning to decline, the proportion identifying financial constraints as an obstacle has now risen for 4 consecutive quarters to reach 62%; the highest level since Q3 2020. This pattern is also evident in insights about credit availability in the industry. A net balance of 46% indicated that credit conditions had worsened over the past 3 months, with a similar amount anticipating a further deterioration over the next 3 months.

Looking forward through 2023, a net balance of 35% believes credit conditions will be tougher than they currently are, which, while significant, is some way off the 60% that took this view in the prior quarter.

Meanwhile, the macro woes are beginning to manifest themselves in the share of respondents pointing to inadequate demand; this has climbed to 28% which, although still low by historic standards, is the highest level since the midst of the Covid pandemic. Anecdotal remarks from contributors also continue to focus on concerns around the planning system.

While workload activity is down across the board, it is interesting to note that recruitment in the sector remains both positive and challenged by skills shortages. A net balance of +35% of respondents reported having recruited employees over the past 3 months, with +15% indicating they intend to do so over the next twelve months. The ongoing shortage of skills appears as prevalent among the trades as among professionals. More than 50% of contributors report difficulties in hiring quantity surveyors and other construction professionals, including project managers. Meanwhile, a broadly similar share point to problems is sourcing bricklayers, electricians, and plumbers. Perhaps unsurprisingly, in view of this, there is still a focus on committing investment to workforce development and training, even if this is a little less so than previously; a net balance of +17% of respondents plan to increase spending in this area, down from a recent high of +37%.

The headline net balance metric for profit margins over 2023 has softened again to -26%, the most negative number since Q3 2020. Skilled labour costs are still viewed as likely to increase by around 7% in aggregate, reflecting the challenges around recruitment.

Simon Rubinsohn, Chief Economist at RICS, 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"

3rd of Brits dipping into savings amid cost of living crisis

A 3rd of Brits admit they will dip into savings this year to pay for unexpected cost of livingemergencies, according to new national research.

The study, commissioned by budgeting experts Park Christmas Savings, lays bare the nation's fears over financial planning; with many saying they are already concerned about affording Christmas 2023, just weeks after last year's celebrations came to a close.

33% of the country will be forced to dip into their festive savings to pay for unexpected emergencies like car repairs or broken appliances as the cost of living crisis bites this year, according to the data.

The study shows that 50% of Brits are already worried about being able to afford Christmas 2023 due to concerns over the crisis. Elsewhere, the study found 42% of people struggle to budget for the festive season every year.

This number has increased amid the cost of living crisis, the nationwide survey revealed, with 41% of UK adults admitting that they don't start saving for the festive season until November.

However, the research did find that people are more motivated to ensure a stress free festive season in 2023 than in years gone by, as a result of stretched finances. And 46% of Brits (46%) want to be better prepared for Christmas this year, with 29% saying a proven savings scheme would help ease their concerns.

With Park Christmas Savings, Brits can achieve affordable and stress-free saving by setting a festive financial target, and then safely putting away money each week to reach their goal.

Park's research found 21% of people save money throughout the year to budget for Christmas. Meanwhile, 12% of Brits start financially planning for Christmas within the 1st 3 months of the year; the approach suggested by the budgeting experts at Park.

Katherine Scott, Director of Marketing at Park Christmas Savings, said:- "Affording a realistically priced Christmas is always difficult - and the ongoing cost of living crisis is understandably making the annual expenditure even more challenging for many. The good news is that, through savvy financial planning and getting ahead of the game, you can navigate the choppy financial waters to ensure an affordable and stress-free Christmas. Park members have been enjoying this massive achievement for over 50 years because we are the longest running Christmas savings club in the UK. Our members set a target at the beginning of the year and then put away what they can when they on a regular basis. The target is flexible too, so it can easily go up or down, whatever's needed. By October and early November, their hard earned savings gets paid out in multi retailer gift cards and vouchers to use with a vast range of high street shops and brands. The findings of our national survey prove that this type of trusted Christmas savings scheme is needed now more than ever before, so we'd just say to anyone wanting a stress free Christmas in 2023, check us out. Nothing ventured nothing gained; just look at our reviews plus membership is free."

To sign up to Park Christmas Savings, visit:- GetPark.Co.UK.

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