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Construction work for small and medium-sized builders (SMEs) bounced back in the first quarter of 2004 according to the Federation of Master Builders' (FMB) latest State of Trade survey. More than four out of ten (41%) respondents reported an increase in workload in the first quarter of the year, and an even higher proportion (44%) expect their workload to rise again in the second quarter.
The findings suggest the dip in results in the final three months of 2003 were a seasonal blip rather than the start of a downturn. That said the positive overall result masks a wide variety of experience of firms in different regions, with a notable contrast between the north and south of the country, the results being markedly stronger in the north.
The balance of firms reporting higher workloads over those reporting lower was most notable in the Scotland (+67%), the North East (+54%), Wales (+50%) Northern Ireland (+34%), and the West Midlands (+33%). However, the East and South East of England both reported negative balances of -8% and -5%, and the result for greater London was relatively weak (+10%). This is the third successive quarter that workloads have gone down in the East and it is the only region to show a negative balance (-3%) for enquiries. The South East is negative for the second successive quarter.
Said FMB director general, Ian Davis:
"These findings show very clearly that the construction market is still strong and that last quarter's blip appears to have been precisely that. The figures for Q1 2004 are as strong as those for the same quarter in 2003, which went on to be an excellent year for small and medium-sized builders. The one slight cause of concern is the knock-on effect of house price inflation, which appears to be affecting work in London and the South East. With first time buyers in these areas locked out of the market by rising prices, the housing market and the home improvement work it fuels is in danger of coming off the rails."
The growth in private sector housing repair, maintenance and improvement (RM&I) accounts for one of the strongest trends both in current projects and forward enquiries - up by 11% in Q1 and projected to increase by a further 22% in Q2. Commercial new build work continued to grow for the fourth successive quarter - up a further 15% in Q1 2004, and projected to increase by 25% in Q2. Once again social housing was the weakest sector, reporting Q1 negative balances of -10% in new build and -1% in RM&I.
Rising workloads go hand in hand with the need for skilled labour. Almost three quarters of those surveyed (71%) reported difficulties in recruiting both direct employees and subcontract labour. This figure is little changed from the last quarter, with bricklayers, carpenters, plumbers and plasterers the most difficult trades to find.
To download the latest State of Trade Survey click here
First posted: 30 April 2004. Last modified: 4 May 2004.
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