There has been a sharp decline in workloads and employment amongst small building companies with 40% of the Federation of Master Builders (FMB) reporting a decrease in the number of work enquiries according to the organisation’s latest State of Trade Survey.
However, the repair, maintenance and improvement (RMI) sector continues to remain buoyant with most FMB members reporting increased workloads. But workloads in this sector has dropped off since Q2 2023.
The decrease in total workload, enquires and employment over Q3 2023 was reportedly driven by a poor performing housebuilding and industrial and commercial sectors.
Overall, difficulty in recruitment has slightly increased, with 39% of members struggling to hire carpenters and 35% struggling to hire bricklayers.
Meanwhile 34% (up from 25% in Q2) have reported difficulty hiring general labourers while half of FMB members report that jobs are delayed because they are struggling to hire skilled workers.
Changes in prices and costs
Seventy-one percent of members report that material costs increased in Q3 2023 with 55% expecting this to continue into the next quarter, which is an improvement on previous quarters.
The impact of increased outgoings has led to 71% of members increasing the prices they charge, with half reporting that the business in on track to make a loss or fall below expected margins.
The knock-on effect of this is a quarter reporting that they are restricting hiring new staff as a consequence of increased outgoings.
“Rising up the political agenda”
Brian Berry, chief executive of the FMB, said: “The RMI sector remains fairly strong this quarter with more FMB members still seeing an increase in workload than a decrease, but worrying signs are on the horizon with a sharp drop off in enquiries.
“House building continues to struggle with more members reporting less workloads than there are reporting more. There has also been a sustained decline in enquiries, suggesting the picture will continue to worsen. Housing is rising up the political agenda as evidenced at the recent party conferences and this new data highlights why the government should be concerned at a time when we need to be building more, and not fewer, new homes.”
Brian concluded: “The survey also highlights the continued pressure on bottom lines, with members putting up prices to accommodate for economic adversity and inflationary pressures. Worryingly we’re also seeing over half of small building companies falling below their expected margins. As the Autumn Statement approaches the Chancellor needs to be mindful of steadying a fragile housing market.”