The general election promised some much-needed stability for the sector but, three months on, an air of uncertainty still hangs over construction.
All eyes are now on the Autumn Budget, which will hopefully contain enough detail about the government’s spending plans and project reviews to encourage investment.
With total new work output set to decline by 4.9% this year, according to our latest forecast, we surveyed more than 250 construction professionals – the majority cost consultants and surveyors – to gather their insights on what lies ahead for the remainder of 2024 and into 2025.
When asked how optimistic they are that the Budget will contain positive measures for the industry, only 3% of those polled said they were ‘very’ optimistic, while 44% were ‘somewhat’ optimistic. Meanwhile, 36% said they were ‘not really’ optimistic, and 12% were not optimistic at all.
BCIS Chief Data Officer, Karl Horton said: “The government clearly has some work to do to convince professionals that there is some substance behind its pledge to “get Britain building again”.
“With the latest reports that billions of pounds of capital spending cuts are on the cards, potentially impacting major infrastructure projects, the Budget might prove difficult reading.
“Slowing or cancelling major projects would shrink industry output, reduce job opportunities, and hurt sectors dependent on construction activity.”
When asked about their workload expectations for the next 12 months, 43% of respondents predicted a rise, while 38% expected it to stay the same. Only 9% anticipated a decrease in workload, with 11% unsure.
Materials cost inflation has been moderating since peaking in 2022 and annual growth in the BCIS Materials Cost Index has been in negative territory in recent quarters. Despite the overall cooling, specific materials, particularly those related to mechanical and electrical (M&E) works, continue to see faster price hikes, especially in high-demand areas like data centre construction.
When we asked respondents about their expectations for materials costs over the next 12 months, 52% predicted an increase, 31% expected them to stay the same, and only 5% believed they would fall. 13% were uncertain about what lies ahead for material costs.
Labour costs continue to be the major driver of project expenses, though annual growth in the BCIS Labour Cost Index is forecast to slow, increasing overall by 16% between 3Q2024 and 3Q2029.
According to the poll, 60% of construction professionals expected labour costs to rise in the next 12 months, while 29% believed costs will stay the same. Only 1% predicted a decrease, while 9% were unsure.
The issue of labour availability continues to be a concern, particularly in light of current demand levels masking skills shortages. When asked about labour availability over the next year, 41% of respondents said they expected it to remain unchanged, while 35% expected availability to worsen. Only 9% said they anticipated an increase, with 15% unsure of what will happen.
Horton commented on the results, saying: “We’ve been polling construction professionals in our quarterly economic outlook webinars over the past year and it’s encouraging that, in our latest update, 43% – the highest proportion we’ve had so far – said they expect their workload to increase over the next 12 months. A further 38% expect it to stay the same.
“We’re forecasting output to pick up next year, but the question of labour availability remains. With more than one-third of our respondents expecting availability to fall, and 41% saying they don’t foresee any change, any increase in demand could exacerbate existing skills shortages.”’
You can access the poll results here.
