Construction Activity Grows Q4 Skills Worries Persist

Construction activity rose for the eleventh consecutive quarter during the last three months of 2015, but firms are still struggling to recruit the skilled tradesmen they need to meet demand, according to new research.

The latest Construction Trade Survey from the Construction Product Association found growth across all areas of the industry, led by new building activity in the private housing, commercial and infrastructure sectors.

On balance, 23 per cent of main building contractors and 31 per cent of specialist contractors reported that output had risen in the fourth quarter compared with a year ago.

One in four main contractors reported increases in orders for private housing, while industrial orders were higher for a balance of six per cent. However, orders for public housing fell, according to 55 per cent of main contractors.

Twenty-one per cent of civil engineering firms reported an increase in new orders in Q4, along with six per cent of SME contractors.

Against this backdrop of growing workloads, skill shortages continue to be a concern. Sixty per cent of main contractors reported difficulties in recruiting carpenters, with 50 per cent seeing problems for plasterers and 47 per cent for bricklayers.

Forty-one per cent said labour costs had risen compared with the previous quarter.

Rebecca Larkin, senior economist at the CPA, said: “It is encouraging that growth continues to be reported across the entire construction supply chain. Overall, the near-term outlook appears positive as firms 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 reported modest increases in enquiries, orders or anticipated sales for Q1 and the 12 months ahead. Main contractors’ order books suggest some weakness in Q1, however.

“Growth will continue to be led by work in the private housing, industrial and infrastructure sectors, but there are clearly areas that are languishing. Activity and orders were reported to be lower in public housing, which reflects the headwinds facing housing associations and local authorities amid recent policy decisions. Orders were also reported to be lower for repair and maintenance, both housing and non-housing, in Q4.

“A shortage of skilled on-site labour remains the largest threat to construction activity over the coming months, however. Half of main contractors found it difficult to recruit bricklayers, carpenters and plasterers in Q4, which continues to exert upward pressure on wage bills and raises the concern of whether expected volumes of work can be delivered.”

Paul Bogle, head of policy and research at the National Federation of Builders, said: “While costs and the recruitment of skilled tradesmen remain an issue, we could be seeing the start of a trend as public housing output declines.

“It is highly unlikely the Government will realise its aspiration of building one million homes by 2020 without a strong house building public sector. Without more widespread access to small sites for SMEs, the increases in private house building numbers cannot be sustained over the longer term.”

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