The Federation of Master Builders (FMB) reports a gradual recovery in the construction sector, with notable gains and challenges.
- Recent data from FMB’s state of trade survey shows a 7% increase in workloads and a 3% rise in enquiries over three months.
- Despite positive trends, recruitment issues persist, with 41% unable to find carpenters and 29% struggling to hire bricklayers.
- Financial pressures mount as 55% report lower than expected profits, prompting price increases for 67% of firms.
- Economic strategies are in place, yet the construction skills crisis remains a significant hurdle for future growth.
The latest figures from the Federation of Master Builders indicate that the construction sector is experiencing a cautious but hopeful recovery. The second quarter of 2024 has seen a 7% increase in workloads, alongside a modest 3% rise in inquiries, signalling a potential turnaround from the difficult conditions faced in late 2023. This improvement offers a glimmer of optimism for the industry, according to FMB chief executive Brian Berry, although he stresses there is still substantial room for growth.
Recruitment remains a significant issue for many firms. The survey highlighted that 41% of members are struggling to hire carpenters, an increase from 31% in the first quarter. Similarly, 29% found it challenging to recruit bricklayers, up from 25% previously. This shortage of skilled tradespeople is contributing to job delays, affecting 43% of FMB members, up from 36% earlier this year. The persistent skills shortage continues to be a pressing concern across the industry.
Financial difficulties compound the sector’s challenges. More than half of the firms reported lower than expected profits this quarter, with 52% on track to make a loss or fall below expected margins, up from 44% in Q1 2024. Consequently, 67% of firms have increased their prices to manage rising costs. Moreover, 10% of firms have had to make staff redundant or terminate contracts, slightly up from 9% previously, indicating the financial strain on businesses.
The government has proposed plans to stimulate the economy by boosting house building rates and reforming the planning system. Although these initiatives are promising, the success of such policies is under threat due to the ongoing skills crisis. Brian Berry emphasises the urgent need for a long-term skills plan to realise these ambitious growth targets set by the government.
Despite some easing in materials costs, with 64% reporting increases compared to 69% in the previous quarter, the financial pressures remain significant. The impact of these outgoings is reflected in businesses’ increased pricing strategies and a continuing struggle to maintain profit margins. In this challenging environment, the call for strategic foresight and robust planning is more critical than ever.
The gradual recovery in construction output is promising, yet overshadowed by recruitment challenges and financial pressures, necessitating focused strategic efforts to ensure sustained growth.
