Small, local builders have been hit hard by rampant inflation and materials price rises with uncertainty on the impact of the war in Ukraine looming large for the sector.
According to the latest Federation of Master Builders (FMB) State of Trade Survey, prices are hitting bottom lines with 98% of builders having experienced material cost increases, with 83% passing these costs onto the customer. Material shortages and a lack of skills still plague the sector causing job delays for the majority of FMB members. 73% of builders have delayed jobs due a lack of materials and 55% are delaying work owing to a lack of skilled labour.
The new data from Scotland indicates a moderate increase in building activity in Q1 2022, with 31% reporting increased workloads. This is a very slight increase to those reporting an increased workload in Q4 2021 which stood at 29%. The survey also suggests that Scottish small builders experienced a significant slowdown of enquiries in Q1, with 27% reporting a rise, compared to 50% in Q4 2021. This puts an increase in reported enquiries in Scotland behind all other home nations, which contrasts with the last quarter of 2021, when Scotland had the top spot.
31% of builders in Northern Ireland reported an increased workload in Q1 2022. However, this is down on the 37% seeing a positive outlook in Q4 2021 and continues the trend downward from 60% in Q3 2021. However, the new figures indicate an uptick in the number of enquiries over Q1 with 38% of builders who responded saying they are receiving increased interest from customers for new work, compared to 16% last quarter. This suggest the market is stabilising slightly and has seen a rise in consumer confidence on the last quarter of 2021.
The FMB State of Trade Survey, which is released quarterly, is the only survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK. The latest survey for Q1 2022 found:
Activity
- Scotland’s reported workload in Q1 is 31%, up from 29% in Q4 2021.
- Enquiries are down sharply on Q4 2021 (50%), and now reported at 27% in Q1.
- Northern Ireland reported workload in Q1 is 31%, down from 37% in Q4 2021.
- Enquiries are up sharply on Q4 2021 (16%), and now reported at 38% in Q1.
Delays
- 73% of small builders have delayed jobs because of a lack of materials.
- 55% of FMB members have delayed jobs due to a lack of skilled tradespeople.
Skills
- 45% of builders are struggling to hire carpenters/joiners, up 2% on last quarter.
- 40% of FMB members are finding it difficult to hire bricklayers, down 1% on last quarter.
Prices
- Nearly all FMB members (98%) reported an increase in material costs in Q1 2022.
- 95% of respondents expect material costs to increase in Q2 2022.
- 83% of builders have put up their prices for work, up from 74% in Q4 2021.
Gavin McGuire, director of FMB Northern Ireland, said: “The recent FMB State of Trade Survey figures for NI demonstrate the slight decline in workloads for the SME sector over the last 6 months. A period of economic uncertainty, increased material costs and rising household bills have seen a number of projects cancelled or put on hold.”
“With a new NI Executive due to be elected in May, the Industry needs stable institutions and investment into key strategies such as Housing, Energy and local development plans to maintain stronger pipelines of secured work.”
Gordon Nelson, director of FMB Scotland, said: “With inflation rising to 7%, which is the highest rate it has been for 30 years; the resultant depletion of consumer spending power means that many local building firms across Scotland have experienced a sharp decline in enquiries for future works. It is comforting that current workloads remain buoyant.”
>>Read more about the Federation of Master Builders here.
