Workloads for small
and medium-sized (SME) construction firms have taken a dip for the first time
in six years, according to the latest research from the Federation of Master
Builders (FMB).
The FMB’s
State of Trade Survey for Q1 2019 shows that the array of problems for
small, local builders have taken their toll and have now put the sector in
negative territory.
The key results are as
follows:
- Overall SME workloads declined
for the first time in six years as more respondents stated lower workloads
(29%) compared with the final three months of 2018 (13%);
- However, expectations for the
future have strengthened with 41% of construction SMEs forecasting
higher workloads over the coming three months, up from 33% in Q4 2018;
- 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;
- A record-breaking 88% of
builders anticipate that material prices will rise further in the next six
months;
- Almost three-quarters (71%) of
construction SMEs expect wages and salaries to increase over the next six
months, up from 66% in the previous quarter.
Brian Berry, Chief
Executive of the FMB, said: “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.
"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.
“Interestingly, skills
shortages in the first three months of this year have lessened slightly. This
is the silver lining to reduced workloads in some parts of the sector – as
workloads have declined, there has been less competition for tradespeople for those
firms with lots of projects underway. However, what is less positive is 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 per cent 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.
“The Government must
do what it can to boost the economy during this time of political uncertainty
and that’s why we’re calling for a reduction in VAT from 20 per cent to 5 per
cent on all housing repair, maintenance and improvement (RM&I) work.
"Reducing VAT on
RM&I work could boost the UK economy by more than £15bn over a five-year
period, according to independent research by Experian. 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.”
