Construction growth ‘continues’ but skill gaps remain

Construction firms continued to recruit staff at a fast pace in December, as the sector’s growth remained robust, but skill gaps are still a key source of concern.

The latest construction purchasing managers’ index compiled by Markit and the Chartered Institute of Procurement and Supply (CIPS) shows that robust output growth was witnessed as 2014 drew to a close.

A score of 57.6 was achieved, with any reading higher than 50 representing growth rather than a contraction in activity.

While the total was lower than November’s score of 59.4, it remained much higher than the long-run series average of 54.5.

Although activity in the civil engineering sub-sector fell slightly last month, the Markit/CIPS report shows that further improvements were seen in terms of house-building and commercial construction.

The job creation rate was significantly higher than the long-term average during December, the report said, as solid workloads encouraged employers to recruit more staff members.

However, improving employment trends have raised concerns about the impact which skills shortages could have on the wider industry.

Over the course of December, the availability of sub-contractors decreased sharply, while their pay levels grew at the second-quickest rate since 1997.

Tim Moore, senior economist at Markit, said the building industry continues to perform well, thanks to decent activity levels in the home construction sub-sector.

He said: “Over the course of 2014, UK construction firms recorded the strongest calendar year of residential building since the survey began in 1997.

“A sharp recovery in house-building, as well as resurgent demand for commercial development projects, continued to boost staff recruitment and sub-contractor pay rates across the construction sector in December.”

Looking ahead to 2015, just 13% of the building groups which were polled now expect that activity levels will fall. Some 52% said they are hopeful that another improvement will be recorded. 

New-build housing projects could be a source of growth this year, it is believed, although some firms have raised concerns about uncertainty regarding the May general election.

Speaking in response to the survey, CIPS chief executive David Noble said the construction industry still needs to replace key skills which were lost during the economic downturn.

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