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Builders see workloads rise

Small construction firms got busier in the first quarter of 2017, despite growing concerns over the cost of labour and materials.

That’s, according to the Federation of Master Builders ‘ latest FMB’s State of Trade Survey for Q1 2017,

The report found that  one in two construction SMEs are predicting rising workloads in the coming months, with just 5% predicting a decrease in activity; tha   85% of builders believe that material prices will rise in the next three months and that  58% of firms are struggling to hire carpenters, a post financial crisis high.

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.”

 “The survey covers the period before the announcement of a snap General Election, which may well cool consumer demand in the coming months. The results are also tempered by a clear rise in output costs for construction companies. Material prices and wages rose markedly in the first three months of this year, with larger numbers of construction SMEs believing that all three will rise further during the next quarter. Indeed, although only 20% of construction products and materials used in the UK are imported, the depreciation of sterling since the referendum last June has seen material prices shoot up – with 85% of builders predicting further rises – this pressure on margins looks set to continue. Such cost inflation presents clear challenges to the profitability of smaller building firms and in many cases, builders will be forced to pass these price increases onto their customers.”

 

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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