State of Trade Survey for 3Q14
The Federation of Master Builders’ (FMB) State of Trade Survey monitors key indicators and predicted future short-term developments in the UK construction industry. It focuses exclusively on small and medium-sized (SME) firms throughout the sector – the typical firm responding is either a general builder or building contractor directly employing fewer than ten people, and turning over between £100 000 and £500 000 per annum.
- In 3Q14, once again the workloads of small and medium-sized (SME) firms rose with a greater proportion reporting higher activity levels compared to the previous quarter (44% vs 40%). In contrast, businesses stating lower levels declined to 10% from 14%.
- The outlook for the rest of 2014 is optimistic as businesses continue to predict rising activity levels. Firms anticipating declining workloads declined to 10% from 11% in the previous quarter. However the number of respondents forecasting no change in workloads increased to 46% from 44%.
- The latest regional composite indicators show declining activity in Scotland. Of the four home nations, the Scottish net balance was the only negative one (at -5), while Northern Ireland’s net balance experienced the greatest improvement of 12 percentage points (to +15).
- Over the next six months, output prices, wages and salaries and material costs are all predicted to rise, albeit at a slower pace. The net balance for wages and salaries registered the greatest decline of 10 percentage points, as fewer firms anticipate an increase (41% vs 52%).
- SME employment increased for the third successive quarter, despite the weakening in its net balance. Slightly fewer respondents stated that their workforce had risen (24% vs 25%), whereas marginally more firms indicated a fall in their staffing levels compared with 2Q14 (15% vs 14%).
House building drives SME construction sector
According to the latest research from the FMB, house building is leading the growth in the SME construction sector but the industry has a long way to go to recover to pre-recession levels. Results from the State of Trade Survey for 3Q14 show that SME workloads are growing across most sectors, with the strongest growth coming from private house building.
"We are at last seeing strong, consistent growth in workloads for SME house builders but the building industry is still a long way from being ‘home and dry’,” said Brian Berry, Chief Executive of the FMB. “The private housing market is recovering from a very low base after a recession which saw house building fall to record lows. Half of all SME house builders went to the wall or were forced to diversify into another area of construction.”
“In the late 1980s, two-thirds of all new homes were built by small local builders but by 2010, this had dropped to just one third,” Berry continued. “Current statistics reveal that SME house builders now deliver only a quarter of all new homes. Since the recession hit, a major factor in this has been the serious difficulties SME house builders experience in accessing bank finance, which show little sign of improving in the short term.”
Berry concluded: “The threat of serious skills shortages is also becoming increasingly apparent. Our latest research shows 41% of SME construction firms are now reporting difficulties in recruiting bricklayers – an increase of 7% when compared to three months ago. Carpenters and joiners are also proving difficult to come by with 41% of firms reporting difficulties finding these tradesmen, an increase of 15% when compared to the second quarter of this year. The construction industry has lost 350 000 people since its peak before the recession and this will have a knock-on effect for many years to come. Although the SME sector has entered a period of sustained growth, the legacy of the most deep and protracted recession we have ever experienced has left us with a rocky road to genuine recovery.”
Click here to access the FMB State of Trade Survey for 3Q14.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.worldcement.com/europe-cis/20102014/uk-construction-news-from-the-federation-of-master-builders-693/