Small builders resilient despite material price hikes

The workloads of small and medium-sized (SME) construction firms grew slightly in the first three months of this year despite record numbers of builders reporting rising material prices, according to the Federation of Master Builders (FMB).

Results from the FMB’s latest State of Trade Survey, include:

Construction SME workloads remained positive in Q1 2018 but grew at a slower rate than in Q4 2017

The construction SME sector has now enjoyed five years of consecutive growth

More construction SMEs predict rising workloads in the coming three months, up from 38% in the previous quarter to 49% in Q1 2018

90% of builders reported increasing material prices in Q1 2018 – this is the highest reading on record

More than half (58%) of construction SMEs are struggling to hire bricklayers and 55% are struggling to hire carpenters and joiners

Two-thirds (66%) of construction SMEs expect salaries and wages to increase during the next six months, up from 62% in the previous quarter

Brian Berry, chief executive of the FMB, said: “Workloads for builders continued to grow in the first quarter of 2018 despite the ‘Beast from the East’ wreaking havoc across the UK’s construction sites. However, once again, the growth we are seeing is slower than in the previous three months and this can be partly attributed to pressure from rising costs.

“Indeed, 90% of builders reported increasing material prices in the first three months of 2018 and this is the highest reading on record. Insulation, bricks and timber are the materials that have increased the most and builders are predicting that these price increases will continue. We are also seeing increased salaries for tradespeople stemming from the acute skills crisis and that, coupled with material price hikes, are squeezing margins and stifling growth for construction firms of all sizes.”