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Construction outlook: poll of industry professionals

Published: 25/03/2024

Although construction has left a period of rampant inflation behind, the threat to the health of the industry now is the challenge of dealing with falling demand and stagnating output.

As we forecast total new work output to decrease by 3.2% this year, we polled more than 300 construction professionals, predominantly cost consultants and surveyors, to find out their expectations for 2024.

When asked about their workload over the next 12 months, 43% said they expect it to stay the same, while 33% anticipated a rise. Only 13% said they were expecting a fall in workload in the next year.

Overall materials cost inflation has cooled considerably, with annual growth in the BCIS Materials Cost Index forecast to remain in negative territory until the latter half of the year.

Some prices remain historically high, though, and there is of course huge variation between materials. BCIS is also monitoring the ongoing disruption to shipping in the Red Sea and possible inflationary effects. Members of our tender price index panel reported in March that the element of risk is already being priced into some materials and components.

We asked our respondents what they thought would happen to materials costs in the next year. 39% said they thought they will rise, while 35% said they expect them to stay the same. 17% said they were expecting them to fall, while 9% said they didn’t know.

With materials inflation falling away, labour has become the more significant cost driver on projects. We’re forecasting annual growth in the BCIS Labour Cost Index to be 8.1% in 1Q2024 before it eases to 5.5% in the final quarter of the year.

The majority of our polled professionals – 56% – said they expect labour costs to increase in the next 12 months, with a further 29% saying they thought they would stay the same. Just 7% are predicting a fall in labour costs, and 8% said they didn’t know.

Skills shortages have been reported across the industry, though the issue of labour supply is likely being masked by decreased demand currently. We asked the construction professionals what they thought would happen to labour availability in the next year.

43% said they expect availability to stay the same, while 28% said they expect it to fall, and 17% said they thought it would rise. The remaining 11% said they didn’t know.

BCIS Chief Economist, Dr David Crosthwaite said: ‘It’s encouraging to see that more than three-quarters of the construction professionals we polled are anticipating their workload to either stay the same or increase in the next 12 months given what we have seen with the decreases in output in some sectors and the particularly concerning new orders data, which suggests a shrinking pipeline for new work.

‘It’s also interesting to see almost three-quarters expect labour availability to either stay the same or fall in the next year. While calling for monetary policy that promotes investment in construction and gets the economy growing again, we can see the potential problems lurking on the supply side and we need to ensure the appropriately skilled workers are actually there to do the work when demand picks up.’

You can access the poll results here.

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The Building Cost Information Service (BCIS) is the leading provider of cost and carbon data to the UK built environment. Over 4,000 subscribing consultants, clients and contractors use BCIS products to control costs, manage budgets, mitigate risk and improve project performance. If you would like to speak with the team call us +44 0330 341 1000, email contactbcis@bcis.co.uk or fill in our demonstration form

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