The Construction Product Association’s (CPA) latest Construction Trade Survey shows that activity in construction rose for the tenth consecutive quarter in Q3.
This growth was reported by firms across all areas of the industry, from building contractors and SME builders to civil engineers and product manufacturers.
Dr Noble Francis, economics director, said: “Firms across the whole construction supply chain reported rises in output during Q3. Although activity appears to have slowed down, SMEs, civil engineering firms and product manufacturers remain optimistic about the near-term outlook. On the downside, building contractors reported an across-the-board decrease in new orders during the quarter, particularly in the public housing sector.
“A downturn in public housing work is was expected, given the proposed changes to housing benefit, Right to Buy and social rent cuts in the July Budget. Of more concern is the fall in new orders in private housing and commercial, which have driven the construction recovery over the last two years.
“However, not all the news is discouraging. SMEs reported an increase in enquiries, civil engineers reported an increase in Q3 orders and product manufacturers anticipated workloads rising over the next 12 months. Increased headcount among construction firms also signals expectations of further growth in activity.
“Although the overall outlook is largely optimistic, the impact of a shortage of skilled labour continued to manifest itself, not just in difficulties recruiting bricklayers and other on-site trades, but in rising wage bills. In Q3, labour costs were higher for 75% of building contractors, 93% of product manufacturers and 44% of SMEs. Increasing activity over the next year threatens to make these labour supply issues even more acute.”
Richard Beresford, chief executive of the National Federation of Builders, added: “The construction industry’s broad-based recovery should not lull us into ignoring certain concerns. Government policy uncertainty on renewables, the cancelling of the Green Deal and the disposal of housing association stock will leave a vacuum in the repair and maintenance market. Difficulty in recruiting certain skills are driving up costs and the proposals on apprenticeship funding will only make it harder to invest in the very skills the industry needs.”
Key survey findings included 4% of building contractors, on balance, reporting that construction output rose in the third quarter of 2015 compared with a year ago. In Q1 and Q2, these balances were 50% and 17%, respectively.
On balance, 25% of SME contractors reported increased workloads in Q3 compared to three months earlier, and public housing orders decreased in Q3 according to 42% of building contractors, on balance
A balance of 12% reported a fall in orders in private housing while commercial orders were lower for a balance of 20%. However, 22% of SMEs reported an increase in enquiries in Q3, on balance.
In addition, 13% of civil engineering firms reported an increase in new orders in Q3, on balance, and 63% of building contractors reported difficulties recruiting bricklayers, 41% for carpenters and 28% for plasterers in Q3
Lastly, 75% of contractors reported labour costs rose in Q3 compared with the previous quarter.