AMA Research State of the Nation: The State of the Construction and Built Environment Industry

What is the State of the Nation Report?

We asked an audience across the UK to participate in a survey to offer insights into the state of the construction industry.

We’ve compiled these surveys within the report to provide a current breakdown of the state of the nation in the construction and built environment industries.

This blog provides a brief snapshot of our latest findings. For a full understanding, you can find the full State of the Nation report here. 

Optimism and Capacity Levels within the Industry

When we asked respondents about their optimism about the general situation in the UK construction sector, we found that it was lower when compared to the previous quarter.

Only 17% of respondents expressed a more positive outlook, whereas 41% felt less optimistic.

On a more reassuring note, 58% of respondents indicated that their business is operating at or above a satisfactory level of capacity.

We found that businesses operating closer to capacity tend to be more optimistic about the future despite the poor economic outlook, while the opposite is true for those operating below capacity.

Factors Limiting Output for Construction Industry’s Q1 2024

Respondents highlighted economic, regulatory, financial, and client driven factors that are likely to limit business output over Q4.

In particular, the major factors identified were: 

• Access to skilled labour
• Planning and regulation issues
• Pricing pressures, including material and labour cost

Interestingly, when we conducted regional analysis of these responses, we found that these factors were mentioned more frequently by those respondents operating in the Midlands, East Anglia and South-East Regions.

Given the current economic situation, inflation, interest rates and other financial constraints were also significant concerns. This often delays investment decision or can make projects economically unviable.

Sourcing Building Materials in the UK in Q3 2023

The overall ease of sourcing building materials has improved since last quarter. However, there seems to be a notable perceived surge in prices for both UK manufactured and imported building materials in Q3.

When compared to Q2, 68% reported price increases for imported products, while only 6% reported price decreases.

This isn’t far off from UK manufactured building materials, which 62% of respondents reported price increases as well.

As for price comparisons with direct or distributor-purchased building products, distributor prices are seen to have increased slightly more than direct purchases. 60% of respondents noted price increases for distributor purchases, while 57% reported higher prices for direct purchases.

Construction Recruitment Struggles

When asking the industry whether they were having difficulty in recruiting skilled and non-skilled staff compared to Q2, the response revealed a continuous challenge in hiring skilled staff. Whereas the situation appears to be improving for recruiting non-skilled staff.

Research Manager and Editor of the report Shaheena Ahmed commented on this subject:

“The one consistent issue I find when speaking to trade associations, manufacturers and other working in the construction sector is the recruitment of staff.

Interestingly, this is happening across the board, no matter whether the subject is in power-generation, off-site construction or other markets.”

There are a mix of reasons for this, from an ageing workforce, impact of Covid-19 to the impact of Brexit, and the demographic changes in today’s society and legislation.

Skilled Construction Staff Shortage

According to the Office of National Statistics (ONS), in 2019 there were almost 400,000 skilled construction trade workers between the age of 50 and 65.

All of these workers are likely to retire within the next 10 years, and unfortunately, there aren’t many younger workers waiting to take their place.

As our skilled workers age, we’re losing the high-quality skills our workers have spent years perfecting. Although the industry has put effort into encouraging more apprentices within construction, we’re not meeting the levels we need to regain those key skills.

Critical Factors in Helping Businesses Grow in 2024

In terms of business growth, we asked respondents to share the most critical factor they would like to see to help business growth in the next 12 months.

They expressed the significance of:

• Economic stability
• Investments
• Government support
• Access to skilled workers
• Streamlined planning processes

Also included are concerns about aforementioned limiting factors. 

State of the Construction Industry Q4 Results

As of December 2023, our team of researchers are reviewing the results for the final quarter of the year. 

Understand the state of the construction industry as well as the built environment landscape as told by real industry professionals throughout the UK.

Sign up today to receive your State of the Nation report due to be released January 2024.