The Federation of Master Builders’ (FMB) latest State of Trade Survey for Q1 2017 has found that small construction firms enjoyed rising workloads in the first quarter of the year but growing concerns over the cost of labour and materials are still present.
The survey, which is the largest quarterly assessment of the UK-wide SME construction sector, found that UK construction SME workloads increased more significantly than at any time since Q2 2016 (the quarter immediately prior to last June’s EU referendum).
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.”
Looking forward the survey found that one in two construction SMEs predict rising workloads in the coming months, with just 5% predicting a decrease in activity and 85% believing that material prices will rise in the next three months.
Berry continued: “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.
“The combined effects of rising material costs and the ever-worsening construction skills crisis will be reason enough for SME construction firms to be cautious in their optimism. If growth in real household income remains flat, and if consumer confidence is shaken by the impending snap General Election and the triggering of Article 50, there are plenty of potential pitfalls for builders to navigate. Nevertheless, as of yet, the much anticipated ‘Brexit effect’ has yet to hit what is considered to be the bellwether sector of consumer confidence and wider economic health.”
