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Construction growth slows for SME firms through third quarter of 2018

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, which is the only quarterly assessment of the UK-wide SME construction sector, include:

  • Construction SME workloads remained positive in Q3 2018 but grew at a slower rate than they did in the second quarter of 2018;
  • 86% of builders reported increasing material prices in Q3 2018, up from 76% in Q2 2018;
  • More than two-thirds (68%) of construction SMEs are struggling to hire bricklayers and 59% are struggling to hire carpenters and joiners;
  • More than half (58%) of construction SMEs expect salaries and wages to increase over the next six months.

Brian Berry, Chief Executive of the FMB, said: “Growth among the UK’s construction SMEs slowed in the third quarter of this year. A range of factors are at work here, not least ever increasing material prices. Anecdotally, we are hearing worrying reports of banks withholding previously agreed funding for projects which is delaying start dates and dampening growth. This may or may not be related to Brexit-nerves. The construction skills shortage is also taking its toll. More than two-thirds of construction SMEs are struggling to hire bricklayers – brickies are easily the most sought-after tradespeople in the building industry currently. These latest figures match the highest we’ve noted since records began a decade ago. These skills shortages are also leading to projects being stalled because there physically aren’t enough people to build them. Worse still, the scarcity of trades means that when construction employers can find people, they are paying huge salaries which is putting further pressure on margins.”

Berry concluded: “This slowdown in growth should ring alarm bells for the UK Government and give rise to a total rethink of its misguided post-Brexit immigration proposals. Currently, the Government wants to significantly limit the number of construction workers coming into the UK post-Brexit, labelling them ‘low skilled’ and therefore somehow surplus to requirements. Migrant construction workers are indispensable with 13 per cent of our construction workers being from outside of the UK. If construction firms are unable to hire migrant workers post-Brexit, the already severe skills crisis will worsen. This will mean we won’t be able to the build the new homes the Government is keen on delivering and infrastructure projects will grind to a halt. It is imperative that the post-Brexit immigration system allows construction firms to continue to hire workers of varying skill levels. We hope the Government heeds the warning that these latest results show, before it is too late.”

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