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FMB builders “resilient despite price hikes”

Small and medium-sized building firms got slightly busier in the first three months of this year rising material prices, according to the Federation of Master Builders.

 

Ninety percent of builders reported increasing material prices in Q1 2018 – the highest reading on record.

Other key findings of the report include:

Construction SME workloads remained positive in Q1 2018 but grew at a slower rate than in Q4 2017

The construction SME sector has now enjoyed five years of consecutive growth

More construction SMEs predict rising workloads in the coming three months, up from 38% in the previous quarter to 49% in Q1 2018

More than half of construction SMEs (58%) are struggling to hire bricklayers and 55% are struggling to hire carpenters and joiners

Two-thirds of construction SMEs (66%) expect salaries and wages to increase during the next six months, up from 62% in the previous quarter.

FMB Chief Executive Brian Berry: said: “Workloads for builders continued to grow in the first quarter of 2018 despite the ‘Beast from the East’ wreaking havoc across the UK’s construction sites. However, once again, the growth we are seeing is slower than in the previous three months and this can be partly attributed to pressure from rising costs. Indeed, 90% of builders reported increasing material prices in the first three months of 2018 and this is the highest reading on record. Insulation, bricks and timber are the materials that have increased the most and builders are predicting that these price increases will continue.

“We are also seeing increased salaries for tradespeople stemming from the acute skills crisis and that, coupled with material price hikes, are squeezing margins and stifling growth for construction firms of all sizes.

“In terms of house building, these latest results should sound some alarm bells with the workloads of SME house builders dropping off in the first quarter of this year. In 2017/18, 197,000 homes were started in England but this is some way off the government’s target to build 300,000 homes per year.

“The FMB has worked closely with the government to identify how to remove barriers to small local house builders, but these latest results act as a reminder that there is more to be done. The FMB would now like to see the continued and speedy implementation of some positive government policies designed to bring forward more small sites, properly resource planning departments and increase the flow of finance to SME house builders.

“If we are to reach our ambitious house building targets, we cannot rely solely on the largest house builders.”

About Fiona Russell-Horne

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

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