Confidence boosting workload increase for builders despite rising costs, says FMB

Despite growing concerns over the cost of labour and materials, small construction firms enjoyed rising workloads in the first three months of 2017, according to the Federation of Master Builders (FMB).

The FMB’s State of Trade Survey for Q1 2017 shows the workloads of small to medium-sized enterprises increased more significantly than at any time since Q2 2016.

The research also found that one in two construction SMEs predict rising workloads in the coming months, with just five per cent predicting a decrease in activity.

However, the skills shortage and the cost of materials continue to cause concern with 85 per cent of builders believing material prices will rise in the next three months;while 58 per cent of firms are struggling to hire carpenters.

Brian Berry, chief executive of the FMB, said: “The first three months of 2017 proved to be very positive for construction SMEs, which reported strong growth, underpinned by continuing resilience in the home improvement sector.

"Workloads rose in every part of the UK, with particularly positive results in the devolved nations. Given the concerns that wider consumer confidence might be weakening, it’s encouraging that smaller construction firms aren’t sensing any drop-off in demand for their services.

"Indeed, despite Article 50 being triggered and the growing likelihood of a hard Brexit, these latest results demonstrate that builders are increasingly confident about the immediate future, with one in two forecasting higher workloads during the next quarter.”

The survey covers the period before the announcement of a snap General Election, which Berry says "may well cool consumer demand in the coming months".

The results are also tempered by a clear rise in output costs for construction companies.

"Material prices and wages rose markedly in the first three months of this year, with larger numbers of construction SMEs believing that all three will rise further during the next quarter.

"Indeed, although only 20 per cent of construction products and materials used in the UK are imported, the depreciation of sterling since the referendum last June has seen material prices shoot up – with 85% of builders predicting further rises – this pressure on margins looks set to continue.

"Such cost inflation presents clear challenges to the profitability of smaller building firms and in many cases, builders will be forced to pass these price increases onto their customers.”

However, the combined effects of rising material costs and the ever-worsening construction skills crisis may be "reason enough for SME construction firms to be cautious in their optimism," says Berry.

"If growth in real household income remains flat, and if consumer confidence is shaken by the impending snap General Election and the triggering of Article 50, there are plenty of potential pitfalls for builders to navigate.

"Nevertheless, as of yet, the much anticipated ‘Brexit effect’ has yet to hit what is considered to be the bellwether sector of consumer confidence and wider economic health," he concludes.

Your News

If you've got a story that would be of interest to Builder & Engineer readers, send us an email

Features

2017-05-31 14:33

The rate of Insurance Premium Tax (IPT) will rise by two per cent on June 1 to 12 per cent on all non-exempt transactions. Martin Bennison, managing director at construction finance firm Ultimate Finance, explains what this means for UK construction companies.

2017-05-25 09:41

Building Information Modelling (BIM) is growing in popularity and is now mandatory for centrally funded public-sector projects. Experts and the curious are gathering more and more frequently at dedicated congresses, exhibitions and workshops. Many people are now asking: Where does the UK stand on the issue of BIM and the digitisation of the construction industry?

2017-05-10 11:47

Opening site doors to more females is vital to plugging the construction skills gap, reports Claire Cameron

THE construction industry continues to be plagued by a well-documented skills gap with some suggesting the shortage could get worse before it gets better.

2017-05-08 15:27

If you work on a building site, are self-employed or have a zero-hours contract, you might be surprised to know you work in the ”gig economy”. This is the economy characterised by temporary work and irregular hours, pay and working conditions.

2017-03-29 11:31

Jeremy Gould, VP sales Europe, TomTom Telematics, discusses how technological developments in vehicle telematics have opened up new workflow management possibilities for the construction industry

2017-03-21 10:31

With the demand of oil increasing, it’s estimated that the Earth will reach its full capacity for oil consumption at some point within the next 20 years. This is despite the production of oil decreasing, and the construction industry is no exception to this, reports Niftylift.

2017-03-17 11:55

With construction firms leading the way in drone technology, Claire Cameron takes a closer look at how unmanned aerial vehicles (UAVs) can be used onsite

2017-03-07 17:20

While the physical safety of workers is prioritised on construction sites, mental health is often overlooked, reports Claire Cameron

Free E-newsletter Sign-Up

Sign up for our free e-newsletter

Looking for a company or service?