Job vacancies for construction staff continued to rise strongly at the start of the third quarter.

The latest Report on Jobs, published by KPMG and the REC showed construction in joint-first place out of nine industries in the table of demand for permanent staff – and top in the rankings for temp staff.

At 68.3 in July, the index measuring demand for permanent construction employees was up from 58.6 in June.

The equivalent index for temporary/contract construction workers came in at 69.6, up from 61.0 in June and indicative of a marked and accelerated rate of growth.

Richard Threlfall, Head of Infrastructure, Building and Construction at KPMG, said: “It is clear we are in the grip of an industry wide skills shortage, which shows no signs of abating.

“Businesses are struggling to find the talent they need and this will have long term implications for their growth plans and potentially impact the wider performance of the UK’s economy.

“In July over two fifths of recruiters reported a fall in the number of people looking for work, the steepest decline seen in eight months.

“The construction industry in particular is struggling to keep pace with demand, with businesses heavily recruiting both permanent and temporary workers.

“This is driving significant pay growth in the sector of almost 5%, even outstripping Britain’s surging services industry which in comparison saw pay increases of just over 3%.

“The risk is that a shortage of skilled labour in this sector could impede Britain’s major building projects and put the brakes on the country’s booming real estate market.

“The likelihood is we will see no immediate improvement to this situation. We are already seeing hints of a summer slowdown, as both businesses and candidates put their jobs plans on hold and take holiday over August.”