Building contractors in the North West and Midlands believe that skills shortages will hold their businesses back next year, with particular concerns over a lack of quantity surveyors, estimators and site based-personnel.

New research from construction recruitment company Ionic, which has bases in Manchester and Tamworth, found that 72.5% of contractors struggled with skills shortages in 2015 - while 82% believe the issue will have a detrimental effect on their bottom line in 2016.

Ionic conducted a survey of 100 contractors in the two regions, which found some 56.5% of respondents citing cost inflation for labour/subcontractor rates as a barrier to growth – an issue directly linked to skills shortages.

Martyn Makinson, managing director of Ionic, said: "The New Year will highlight some old anxieties for many regional contractors. The construction industry has introduced a range of initiatives this year to try to combat the chronic skills shortages; however, the scarcity of key personnel continues to hold back the sector.

"The health of the construction industry should be a concern for everyone, as its problems impact the cost and delivery of projects from the smallest housing development to large scale ones. The cost pressures are about supply and demand – and the erosion of profit margins for companies which have only just recovered from the recession."

Ionic also found increased volatility in the workforce. Some 58.5% of North West building contractors experienced an increase in staff turnover in the last 12 months. In terms of vacancies, 60% reported that the roles were newly created, and just over half (52.5%) said they'd had to make a counter offer to retain staff in the last 12 months.

The pick-up in activity across the property sector is reflected in the results - with 62% of North West businesses bidding up to 25% more projects than in 2014. The residential market led the recovery, according to 40% of respondents, with 37% also highlighting warehousing/sheds as showing healthy growth.

Mr Makinson added: "People are the raw materials that will help a business grow but competition has returned to the jobs market in a way that impacts the bottom line. In a candidate-driven marketplace, Construction companies need to present themselves as attractively as possible."