Fourth quarter slowdown 'cause for concern'
Smaller building firms across the country saw their workload growth rate dip towards the end of 2015, the Federation of Master Builders' (FMB) latest state of trade survey indicates.
In the final quarter of 2015, SME workloads continued to grow but at a slower pace compared with three months earlier. Around 29% of firms reported higher activity levels, down from 39% while 23% of respondents posted lower workloads, up from 13%.
Over the next three months businesses are projecting rising activity levels, albeit at a much slower rate compared with the previous quarter. More firms predict a fall in workloads (19% vs 14%) while the share of firms expecting higher workloads dropped, to 22% from 32%.
Over the coming six months, output prices, wages and salaries and material costs are all predicted to increase. However the net balance for output prices did post a fall, of two percentage points, as fewer respondents (45% vs 47%) expect prices to rise.
FMB chief executive Brian Berry said: “The building industry remains confident of continued growth but the slowdown we saw in the last quarter is a cause for concern. Undoubtedly, the adverse weather experienced in large parts of the country has played its part, by causing projects to overrun and costs to spiral. However, the fact that both current and expected construction workloads are down in every region is worrying given some of the gloomy predictions being made about the wider economy.”
Mr Berry continued: “Most concerning is that the last three months of 2015 represent the first quarter in nearly three years in which private sector SME housebuilding showed a negative balance. Even if this is a temporary blip, it comes at a time when merely manging to tread water would be inadequate in tackling the housing crisis. We need firms of all sizes firing on all cylinders if we’re going to address the chronic under-supply of housing but, unfortunately, a complex set of problems continue to constrain smaller developers. A concerted effort to tackle ongoing issues around access to finance, availability of suitable small sites and shortages of skilled labour is vital. The survey findings underline the latter point, showing 52% of our members reporting difficulty in finding carpenters and joiners, and 50% continue to have trouble hiring quality bricklayers.”
He concluded: “We still expect to see growth in our sector continue throughout 2016 and we are optimistic that businesses can bounce back from what appears to have been a disappointing end to the year. However, the coming 12 months still hold in store considerable headwinds, not least the fears over the wider economy slowing down. If 2016 starts in anything less than a positive fashion, we could see growing fears that the hard-earned gains made by the construction industry over the past two or three years are indeed under threat.”
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This article was published on 25 Jan 2016 (last updated on 25 Jan 2016).