According to new research, construction activity increased for the eleventh consecutive quarter in the last three months of 2015, but firms are still struggling to recruit the skilled tradesmen needed to meet demand.
The Construction Product Association’s latest Construction Trade Survey found growth in all areas of the industry, led by new construction activity in the private housing, commercial, and infrastructure sectors.
Overall, 23% of main building contractors and 31% of specialist contractors reported that output increased in the fourth quarter compared to the previous year.
One in every four major contractors reported an increase in private housing orders, while industrial orders increased by 6%. Orders for public housing, on the other hand, have fallen, according to 55% of major contractors.
Twenty-one percent of civil engineering firms and six percent of SME contractors reported an increase in new orders in Q4.
Skill shortages remain a concern in the face of increasing workloads. Sixty percent of general contractors said it was difficult to find carpenters, 50 percent said it was difficult to find plasterers, and 47 percent said it was difficult to find bricklayers.
Fourty-one percent of respondents said labour costs had risen since the previous quarter.
“It is encouraging that growth continues to be reported across the entire construction supply chain,” said Rebecca Larkin, senior economist at the CPA. Overall, the near-term outlook appears to be positive, with firms ranging from construction product manufacturers at the beginning of the supply chain to specialist contractors, SME builders, and civil engineers carrying out work on the ground reporting modest increases in enquiries, orders, or anticipated sales for the first quarter and the next 12 months. However, the order books of the major contractors indicate some weakness in the first quarter.
“Growth will be led by work in the private housing, industrial, and infrastructure sectors, but there are clearly areas that are stagnant.” Activity and orders in public housing were reported to be lower, reflecting the challenges facing housing associations and local governments as a result of recent policy decisions. Orders for repair and maintenance, both housing and non-housing, were also reported to be lower in Q4.
“However, a lack of skilled on-site labour remains the greatest threat to construction activity in the coming months.” In Q4, half of main contractors reported difficulty recruiting bricklayers, carpenters, and plasterers, putting upward pressure on wage bills and raising concerns about whether expected volumes of work can be delivered.”
“While costs and the recruitment of skilled tradesmen remain issues, we may be seeing the start of a trend as public housing output declines,” said Paul Bogle, head of policy and research at the National Federation of Builders.
“It is highly unlikely that the government will meet its goal of building one million homes by 2020 without a strong public housing sector.” The increases in private house building numbers cannot be sustained in the long term unless SMEs have more widespread access to small sites.”