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Figures published today in the Federation of Master Builders (FMB) latest State of Trade Survey for small and medium sized construction companies may indicate a slowdown in the spectacular growth that has characterised this sector for over four years. Taking the UK as a whole the results demonstrate no change in workload and employment levels during the last three months of 2003 with another flat growth period forecast for the first quarter of 2004.
The results are well short of the workload predicted in the previous quarter's survey largely due to a slackening of domestic repair and maintenance work - the type of work in which the largest proportion of FMB survey respondents are engaged. With only 16% reporting an increase in private housing RM&I work compared with 17% indicating a fall, there is a negative weighted balance of 'higher' and 'lower' replies for the change in this type of work for the first time since weighting of individual replies was introduced in 1999. Other areas where the actual outturn was worse than expected were new private and social housing and industrial building work.
Commenting on the results Ian Davis, FMB Director General, said:
"The results are much weaker than those for the same period in 2002, but they are broadly comparable to those obtained from the fourth quarter 2001 survey, after which 2002 turned out to be a buoyant year for small and medium-sized building firms. We would normally expect some weakening in the final quarter of the year due to seasonal variation. These figures give cause for concern but we are not saying that a recession has started."
The FMB's State of Trade survey also highlighted significant regional variation in current and projected workloads.
The North East (+53%), West Midlands (+28%), North West (+23%), South West (+19%) and Scotland (+18%) all reported respectable balance of growth figures, whereas the reverse was true for Eastern region (-49%), East Midlands (-35%) and Yorkshire & Humberside (-17%). Eastern region also reported the weakest workloads in the third quarter 2003 survey but on that occasion it was the only region for which the result was negative.
Actual Q4 workloads for the North East, North West and West Midlands were better than predicted in Q3, and these regions continue to forecast significant growth in the first quarter of 2004 and beyond.
Employment trends provide a further indicator that a downturn has not yet begun. Overall, employment figures for the fourth quarter can best be interpreted as indicating no change, and the great majority of respondents - almost four out of every five firms - expect no change in their workforces during the first three months of 2004. Similarly, there is little change in the numbers reporting difficulty in obtaining skilled labour during the last quarter; this rose by just one percentage point to 71%.
Concluded Ian Davis:
"Viewed as a whole, the results of the FMB's fourth quarter 2003 survey are much weaker than those of the third quarter, but perhaps by no more than might be expected on account of seasonal variations in building activity. In some areas of the country the forecast for the next quarter is similarly weak, but others are forecasting growth. We will need to see the outcome of the next quarter before we can draw any firm conclusions on the market as a whole."
First posted: 23 January 2004. Last modified: 23 January 2004.
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