Workload for small and medium sized builders falls for first time in six years

Workloads for small and medium sized builders has fallen for the first time in six years, with an array of issues taking their toll, putting the sector into negative territory, according to an industry survey report.

The latest State of the Trade survey covering the first quarter of 2019 from the Federation of Master Builders (FMB) found that 29% of respondents stated they have lower workloads, up from 13% in the last quarter of 2018.

However, expectations for the future have strengthened with 41% of construction SMEs forecasting higher workloads over the coming three months, up from 33% in the final three months of 2018.

There was also further good news with the survey indicating that skills shortages eased slightly among some occupations, most likely due to less competition for workers because of lower workloads. Bricklayers were once again the trade in most short supply with 64% of firms having difficulties hiring them.

But the industry is facing a real mixture of issues and a record breaking 88% of builders anticipate that material prices will rise further in the next six months while 71% expect wages and salaries to increase over the next six months, up from 66% in the previous quarter.

‘This dip follows three years of political uncertainty, which have taken their toll on the SME construction sector. We knew anecdotally that the first three months of this year had been less busy for many of our members and our latest research confirm this,’ said Brian Berry, FMB chief executive.

‘A perfect storm of diminished consumer confidence, rising material prices and increases in wages and salaries has resulted in the construction SME sector detracting for the first time in six years. These results are also very much in line with recent stats from the ONS and PMI data, all of which point to a wobble in the construction industry. Consumers and businesses alike are understandably putting off large investment decisions while the never-ending Brexit negotiations rumble on,’ he explained.

He pointed out that while skills shortages in the first three months of this year have lessened slightly, it is likely to be due to reduced workloads and it is not good news that almost three quarters of small building firms expect wages and salaries to increase over the next six months.

‘Worse still, our latest research reveals record breaking results for expected material price rises with almost 90% of firms predicting that they will increase further in the coming months. This is bad news for builders and consumers alike as construction projects, large and small, become more expensive to deliver,’ Berry said.

The FNB wants the Government to do what it can to boost the economy during this time of political uncertainty and is calling for a reduction in VAT from 20% to 5% on all housing repair, maintenance and improvement and pointed out that according to independent research from Experian this could boost the UK economy by more than £15 billion over a five year period.

‘This reduction in VAT could also create more than 95,000 jobs and save 240,000 tonnes of carbon dioxide from thousands of homes. Such a VAT reduction has the backing of more than 60 charities, trade associations, business groups and financial firms as there is no other policy that would achieve so many of the Government’s economic, environmental and social aims with so little cost to the public purse. At a time of continued political uncertainty and a dip in construction output, a VAT reduction for RM&I is exactly what the UK economy is crying out for,’ Berry added.