Growth among small and medium sized builders slowed in most parts of the UK in the third quarter of this year although it was the 18th quarter in a row of positive growth, the latest analysis shows.
It means that the construction SME sector has been growing for four and a half years since the second quarter of 2013 with 41% predicting rising workloads in the coming three months but this was down from 48% in the previous quarter.
The state of trade survey from the Federation of Master Builders (FMB) also shows that 82% of builders believe that material prices will rise in the next six months and 58% expect salaries and wages to increase over the same period.
Concerns about finding employees continues. The FMB has previously warned that Brexit could affect firms who hire workers from overseas and the survey shows that 61% are struggling to hire carpenters and joiners and 59% are struggling to hire bricklayers.
‘Material price hikes and skills shortages are putting the brakes on growth among the UK’s small building firms. Now that the general election is well and truly behind us, it was our hope that consumer confidence would spring back and spur growth among small building firms in the third quarter of this year,’ said Brian Berry, Chief Executive of the FMB, said.
‘However, our latest research shows that rising costs are dampening the performance of construction SMEs. The spike in salaries is a direct result of the ever worsening skills shortage in our sector. It’s a simple consequence of supply and demand. Construction workers know their worth and given the scarcity of skilled tradespeople, these individuals are understandably demanding higher wages from their employers,’ he explained.
‘Indeed, nearly two thirds of construction SMEs are struggling to hire carpenters and joiners which has now surpassed bricklayers as the trade in shortest supply,’ he added.
Although the SME construction sector is still growing, the Government needs to keep a watchful eye on this slowdown in growth, according to Berry. ‘Construction is a strategic industry and without it, the Government will be unable to build the homes, schools, hospitals, roads and railways it needs. With Brexit on the horizon, the Government must keep the needs of the construction industry in mind as it negotiates the UK’s departure from the European Union,’ Berry said.
‘In particular, Ministers must work closely with the sector to develop a post-Brexit immigration system that works for construction and a transition period that allows us to gradually reduce our reliance on EU migrant workers,’ he added.
Although there is a lot of talk about building more homes, this is not necessarily filtering down to smaller builders. ‘We are urging the Housing Minister to turbo-charge the SME house building sector by fully implementing the proposals in the Government’s Housing White Paper which was published back in February. Eight months on, our sector is crying out for the very sensible proposals aimed at removing barriers to SMEs so we can once again get Britain building en masse,’ Berry concluded.
