Warning signs for construction industry as growth slows

Published:  25 October, 2017

Growth among construction SMEs slowed in most parts of the UK in the third quarter of this year, according to the Federation of Master Builders (FMB).

Key results from the FMB’s latest State of Trade Survey, a quarterly assessment of the UK-wide SME construction sector, included:

  • Q3 2017 was the 18th consecutive quarter of positive growth which means that the UK’s construction SME sector has been growing for four and a half years
  • 41% of construction SMEs predict rising workloads in the coming three months, down from 48% in the previous quarter
  • 82% of builders believe that material prices will rise in the next six months
  • Over half (58%) of construction SMEs expect salaries and wages to increase in the next six months.

Brian Berry, Chief Executive of the FMB, said: “Material price hikes and skills shortages are putting the brakes on growth among the UK’s small building firms. Now that the General Election is well and truly behind us, it was our hope that consumer confidence would spring back and spur growth among small building firms in the third quarter of this year. However, our latest research shows that rising costs are dampening the performance of construction SMEs.

“The spike in salaries is a direct result of the ever-worsening skills shortage in our sector. It’s a simple consequence of supply and demand – construction workers know their worth and given the scarcity of skilled tradespeople, these individuals are understandably demanding higher wages from their employers. Indeed, nearly two thirds of construction SMEs are struggling to hire carpenters and joiners, which has now surpassed bricklayers as the trade in shortest supply.”