Growth slows for SMEs in construction, says federation

Brian Berry, chief executive of the Federation of Master Builders
Brian Berry, chief executive of the Federation of Master Builders
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The SME construction sector grew in the second quarter of 2017, albeit at a slower rate than the first three months of the year, according to the Federation of Master Builders (FMB).

The FMB’s State of Trade Survey, the only quarterly assessment of the UK-wide SME construction sector, found that the period was the 17th consecutive quarter of positive growth meaning that the construction SME sector has been growing for more than four years.

Almost one in two construction SMEs predict rising workloads in the coming three months, with just nine per cent predicting a decrease in activity.

Meanwhile, 83 per cent of builders believe that material prices will rise in the next six months;

Recruitment continues to be an issue for many firms, with 60 per cent of construction SMEs struggling to hire bricklayers, 57 per cent struggling to hire carpenters and joiners, and 47 per cent struggling to hire plumbers;

Almost two-thirds (62 per cent) of construction SMEs expect salaries and wages to increase in the next six months.

Brian Berry, chief executive of the FMB, said: “Rising material prices and salaries could be starting to dampen growth among construction SMEs.

“However, it is encouraging to see that the sector has continued to grow despite the recent snap General Election and the resulting hung Parliament.

The construction SME sector is particularly vulnerable to any dips in consumer confidence that might come from periods of political uncertainty.

It may be that a number of home owners decided to delay any big spending decisions on new extensions or loft conversions while the election campaign was underway – this would account for the slow-down in growth seen in the second quarter of 2017.”

He said: “Looking ahead, almost two-thirds of construction firms expect wages and salaries to increase over the next six months and this is in contrast to stagnant wages elsewhere in the economy.

“Rising salaries are undoubtedly the result of the escalating construction skills shortage.”

He added: “The construction industry urges Ministers to bear in mind their strategic house building and infrastructure targets before pulling up the drawbridge on EU migrant workers.