Construction activity strengthens despite material cost and shortages

Global construction markets continue to see construction activity strengthening, with workloads across all sectors expected to deliver a rise in output over the next year.

Leading this growth is infrastructure, with 49% of built environment professionals predicting a rise in output, particularly in areas such as Energy and ICT, according to the latest feedback to the RICS Global Construction Monitor.

Although activity continues to strengthen, the pace of growth appears to have moderated slightly this quarter as the headline Construction Activity Index* dipped slightly, from +25% in Q2 to +18% in Q3 (in net balance). This slight easing in the rate of growth can be attributed to the continued pressures hindering activity, with 83% of respondents noting material price inflation as a key impediment and anticipating costs to increase by 7% over the next year.

Read the latest sentiment for global construction markets in the RICS Q3 Global Construction Monitor.

At regional level, the Construction Activity Index shows Europe as the strongest region this quarter, with robust growth anticipated in the residential sector over the next year. Infrastructure though is the leading sector across the Americas, APAC and MEA.

Chart 1: Construction Activity Index

Construction activity remains strong across the UK, however, problems sourcing materials and cost increases present significant pressures, challenging the strong workloads led by new infrastructure schemes underway. Though the headline Q3 reading of total activity slipped slightly from +38% in last quarter to 33%, respondents still note strong levels of construction work, led mostly by infrastructure projects, particularly in the areas of energy, roads and water.

Availability of construction materials was the biggest impediment to activity reported in the latest report, as respondents anecdotally cite the struggle of supply chains across the UK re-establishing themselves post-Brexit and the pandemic.

Find out more in the latest UK report.

Kindly shared by The Royal Institution of Chartered Surveyors (RICS)

Main photo courtesy of Pixabay