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East construction activity dips as SMEs brace themselves for price rises and wage hikes

PUBLISHED: 10:05 26 October 2017

Houses under construction. Picture: ANDREW MATTHEWS/PA WIRE

Houses under construction. Picture: ANDREW MATTHEWS/PA WIRE

The eastern region has seen a decrease in small and medium-sized firms’ (SME) construction activity in the last quarter, according to a survey.

A survey by the Federation of Master Builders (FMB) found that while overall there was a 34% positive net balance suggesting workload, expected workload and enquiries were up, that compared with a high of 42% in the second quarter of the year.

The net balance is the difference between those firms seeing higher or lower volumes under the three headings.

Growth among construction SMEs slowed in most parts of the UK in the third quarter of this year, according to the FMB.

Its latest State of Trade Survey, a quarterly assessment of the UK-wide SME construction sector, still recorded the 18th consecutive quarter of positive growth which means that the UK’s construction SME sector has been growing for four and a half years.

But across the country, 41% of construction SMEs predict rising workloads in the coming three months, down from 48% in the previous quarter.

It also found 82% of builders believe that material prices will rise in the next six months, and on the skills front, 61% of construction SMEs are struggling to hire carpenters and joiners and 59% are struggling to hire bricklayers and 58% expected wages to rise in the next six months.

FMB chief executive Brian Berry said: “Material price hikes and skills shortages are putting the brakes on growth among the UK’s small building firms. Now that the General Election is well and truly behind us, it was our hope that consumer confidence would spring back and spur growth among small building firms in the third quarter of this year. However, our latest research shows that rising costs are dampening the performance of construction SMEs.

“The spike in salaries is a direct result of the ever-worsening skills shortage in our sector. It’s a simple consequence of supply and demand – construction workers know their worth and given the scarcity of skilled tradespeople, these individuals are understandably demanding higher wages from their employers. Indeed, nearly two thirds of construction SMEs are struggling to hire carpenters and joiners which has now surpassed bricklayers as the trade in shortest supply.”

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