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Figures published today by the Federation of Master Builders (FMB) show clear indications that the construction boom in the UK continued throughout the second quarter of 2002 (April, May and June). Across the board, the UK's small and medium-sized building firms saw their workloads increase for the twelfth successive quarter. The figures, published in the FMB's latest quarterly 'State of Trade Survey' show that the outlook for small and medium-sized builders remains positive, although there has been a slowdown in the rate of increase, mainly due to the adverse effects of the ongoing issue of a chronic shortage of skilled labour throughout the UK construction industry.
Commenting on the latest figures Ian Davis, director general of the FMB said:
"In contrast to many other sectors in the UK economy, the building industry continues to enjoy a period of sustained growth which looks set to continue at least until the end of this year. Against this positive backdrop, however, recruiting skilled labour remains a very serious issue for small and medium sized businesses, who see this and the increase in bureaucracy as the biggest burdens on their businesses at this time.
"However the shortage of skilled workers is great news for youngsters who have just received their GCSE results. The building and construction industries need you! There are well-paid jobs and good training schemes available for those looking to gain vocational skills and qualifications, rather than sit behind a desk."
Workload changes
The industry survey reports that 32% of the builders polled said their workload had increased in the second quarter of 2002. A further 47% stated that their workload remained steady. The Eastern Counties showed the greatest percentage of increases in workload, with 59 % of firms reporting an upturn in business. This reflects the massive surge in the property market in this region. Other areas where significant numbers of builders had seen an increase in work were the East Midlands (54%), West Midlands (41%) and Scotland (40%).
However, there are signs that the sustained growth over the last three years is beginning to stagnate in some areas, with around one in five businesses across the UK reporting a marginal decrease in workload. This trend was most notable in the North West, London and the South East, although certainly in the case of the latter two regions, the continuing acute shortage of skilled and specialist labour has had an effect on the workload figures. As a result, many builders have full order books, are working at full capacity and cannot take on more work as they are unable to source the additional labour required to meet the demands.
By type of work, new build and repair, maintenance and improvement (RMI) work in the private housing sector remained the strongest growth months of 2002. 29% of respondents reported an increase in new build private housing work, with just under a quarter (24%) doing more private RMI work. On the flip side, social housing new build and RMI saw a slight decline.
In the non-residential sectors, results were weaker than expected. Some 29% of builders had suffered a decline in public new build work, whilst just over a quarter (26%) of builders working in public repair and maintenance saw a decline in their workload. However, 27% of builders said that industrial work had increased and 24% saw an increase in non-residential commercial work.
Future workloads
Looking ahead into the third and fourth quarters of 2002, there is a relatively strong expectation that the construction boom will continue until at least the end of the year. Overall, 42% of builders expected an increase in workload, with the highest regional figures coming from the North East (59%), Scotland (58%) and Wales (57%).
The greatest percentage increases in workload are expected in private housing new build and RMI, social housing RMI and, in the non-residential sector, new build, commercial and private repair and maintenance.
Work enquiries
38% reported a rise in enquiries about future work, slightly lower than the first quarter of 2002. A further 38% said that the level of new business enquiries had remained constant, with just under a quarter (24%) reporting a decrease in enquiries.
By region, the areas with the highest percentage of builders reporting an increase in new business enquiries were the North East, Yorkshire and Humberside, Wales, the South West and Eastern Counties. The West Midlands and Scotland fared the worst in terms of increases in business enquiries against those reporting a decrease, compared to Q1, 2002. The West Midlands had 21% reporting an increase in enquiries against 46 % reporting a decrease, while in Scotland the figures were 31 % seeing an increase against 47 % experiencing a decrease.
The Labour Market
As was mentioned previously, finding skilled labour is an ongoing problem for small and medium sized builders in the UK. In the survey, more than half (51%) said that they had experienced problems recruiting skilled labour in the last quarter, a rise of some 8% on the figure for the first quarter of 2002. Furthermore, 41% of respondents had trouble finding sub-contractors, against 40% in Q1.
Employment trends
20% of builders said that they had increased their workforce, whilst two thirds said their workforce had remained constant and 14 % had seen a decrease in their workforce. This suggests that whilst one in five had taken on more employees the majority had a static workforce, despite overall increases in workload, a further indication of labour shortage. Looking forward to anticipated changes in employment for the next quarter, only 5% expect their workforce to decrease, with 25% hoping to take on more people in the next few months if they can source suitably qualified labour.
First posted: 28 August 2002. Last modified: 28 August 2002.
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