Small to medium construction companies experienced strong growth in the first quarter of 2017 according to the Federation of Master Builders
The Federation of Master Builder’s (FMB) ‘State of Trade Q1 2017’ report, released quarterly, is one of the most accurate into the state of the construction industry. The first report of 2017 has been recently published and gives some interesting feedback for construction companies.
Firstly, UK small to medium (SME) construction enterprises saw workloads increase more significantly than at any time since Q2 2016—the quarter immediately prior to last June’s EU referendum.
The survey revealed half of all SMEs believed workloads are likely to continue to increase. There was also concern over skills shortages with over half of all construction companies reporting they are finding it difficult to hire carpenters.
Another element to come out of the survey was uncertainty over the supply chain. A significant percentage of builders said they thought it was likely material prices would rise in the next quarter.
Unexpected findings
The news comes despite problems of rising building material cost, investor uncertainty over the economic impact of Brexit and the forthcoming snap general election.
Brexit has undoubtedly had an impact on the construction sector. Earlier this year construction managers noted they were already seeing an exodus of EU workers, reporting it was becoming increasingly difficult to hire workers from the EU. It is also expected a hard Brexit will cause significant problems within engineering. The ‘Staying on Track’ report, published by infrastructure giant and construction contractor Balfour Beatty in February, revealed more than 10 per cent of its workforce was from the EU. Additionally, 11 per cent of new recruits in 2016 held EU passports. This, the firm said, would cause issues with recruiting skilled engineers.
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.”
Berry concluded: “The combined effects of rising material costs and the ever-worsening construction skills crisis will therefore be reason enough for SME construction firms to be cautious in their optimism. 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.”
