Consumer demand for building work holds steady
The first survey of master builders since the EU referendum shows that their workloads have continued to rise, albeit at a slower pace.
The Federation of Master Builders’ Q3 2016 state of trade survey found that member firms are also forecasting that activity levels will continue to rise for the rest of the year, although again at a slowing rate.
In Q3 2016, the net balance for overall workloads remained in positive territory for the 14th successive quarter, despite falling by 6 points to +18. A third of firms reported higher workloads, down from 37%, while marginally more businesses stated lower workloads compared with the previous quarter (14% compared to 13%).
FMB chief executive Brian Berry said that the survey showed there had been no dip in consumer confidence getting home improvement work done since the referendum in June.
He said: “Ongoing workloads for construction SMEs remained remarkably resilient in the months following the referendum vote, suggesting that consumer demand – which accounts for the bulk of SME work – has held up far better than anticipated. Some of the other key indicators of SME activity, such as employment levels, anticipated workloads and new work enquiries, are all positive, albeit showing slowed growth compared to the previous quarter. If we all agree that construction is a ‘weather vane’ industry, and demand for home improvement and new build homes an important gauge of consumer confidence, then our results chime with the cautious positivity demonstrated across construction and the wider housing market.”
Mr Berry continued: “That being said, construction bosses will be taking nothing for granted. Growth has softened compared to the buoyant first half of the year and some parts of the UK have gone into decline. In particular, London is flat-lining which is concerning given that it is typically one of the strongest markets for construction SMEs. Our feeling is that the construction skills shortage, which we know is particularly pronounced in London and the south east, is starting to bite.”
He concluded: “Our latest figures show that nearly two-thirds of SMEs are struggling to hire bricklayers and 55% are having a hard time sourcing carpenters and joiners. This highlights a different potential consequence of Brexit – the possibility that we will have a less flexible workforce. 12% of construction workers working in the UK are of non-UK origin, forming a vital part of a labour force that is already stretched. Given that the skills gap is only expected to grow over the next decade, it’s vital that talented tradespeople continue to come to the UK. For this reason, we welcome the government’s U-turn on requiring companies to publish data on the percentage of foreign workers they employ. Such a move would send completely the wrong message to foreign workers currently living and working in the UK and those who might consider coming here.”
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This article was published on 19 Oct 2016 (last updated on 19 Oct 2016).