Rising costs and
continued uncertainty over Brexit are to blame for the slight drop in
construction output, according to the Federation of Master Builders (FMB).
Commenting on the construction
output figures for October 2018, published by the Office for National
Statistics, Sarah
McMonagle, Director of External Affairs at the FMB, said: “The UK
construction sector is more or less flat-lining with a small decline of 0.2% in
October compared with the previous month.
"Rising costs for
large and small construction firms are contributing to the slight drop in
construction output."
The latest construction output figures show the UK
construction sector declined by 0.2% in October 2018 compared with September
2018.
Further figures
highlight the decrease in October 2018 was driven by declines in infrastructure
(down 3.7%), public new housing (down 8.1%) and total repair and maintenance
(down 0.8%); the largest contributor offsetting these decreases was private new
housing, which grew by 2.4%.
Despite the slight
month-on-month decline, construction output in the three months up to October
2018 was 1.2% higher than the previous three-month period; this growth was
slower than in recent months, with a steady decline being seen from a 2018 high
of 3% growth for the equivalent series in July 2018.
"Recent
Government statistics show that in the past year, there were nearly 3,000
insolvencies in the construction industry.," continued Sarah McMonagle.
"While wages are continuing to rise because of the ever-worsening skills
crisis in our sector, firms are also feeling the pinch because of the rising
cost of materials. The depreciation of sterling following the EU referendum has
meant key materials have become more expensive.
"We are expecting
material prices to continue to squeeze the margins of construction firms with
recent research from the Federation of Master Builders showing that almost 90
per cent of builders believe that prices will continue to rise in the next six
months.
“The future is still
looking uncertain for the UK construction sector because the Government has set
out plans for a post-Brexit immigration system that would severely worsen the
skills shortage.
"The Government
has said it will limit the number of low skilled workers entering the UK from
the EU and further afield. This would include thousands of tradespeople,
including bricklayers and carpenters, and these roles are ones that the
construction sector relies on. More than 9 per cent of the UK’s construction
workers are from the EU and this rises to one third in London.
"It is therefore
imperative that the Government listens to the needs of the sector and delivers
a post Brexit immigration system that allows us to draw on essential migrant
workers.
"Without this, we
won’t be able to keep building at the current rate and construction output will
continue to fall.”
