Recent ONS data shows new orders rising significantly, but finding talent to fill the skills gap is likely to require long-term investment, writes Kris Hudson.
As the construction sector and the wider economy continues to recover post Covid, with construction leading the way, it remains to be seen whether green shoots will convert into deep roots. Despite new positive data on construction output and new orders, manifesting labour shortages and ongoing cost increases remain a threat to the sector’s recovery, and could hamper long-term growth prospects.
Recent Office for National Statistics (ONS) data shows new orders rising significantly, increasing by 17.6% on the quarter and 135.2% on the year as of Q2 2021 as demand climbs out of its pandemic trough at pace. It’s worth bearing in mind that this is from a much lower base than even during a global recession such as 2008, and shows a rapid return of investor appetite.
New construction work in the UK (£m)
This should bode well for construction output – which tends to lag a couple of quarters behind new orders’ progress. But this is far from certain, and labour availability to deliver these new orders remains a significant challenge. Unless demand declines, productivity improves, or labour supply increases we will only see the ongoing undersupply of labour persist.
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