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Despite the recent series of interest rate increases, the building industry is confident of future growth but warns that this growth cannot be taken for granted. The latest State of Trade Survey from the Federation of Master Builders reports that, although in some sectors there has been a marked decline in new orders, overall, members of the Federation are anticipating an increased level of orders during the next quarter.
The Survey for the second quarter of 1998, found that workload in the private sector has increased by 2% driven mainly by a large increase in repair and maintenance work for private hosing. Firms undertaking new housing work have reported a further decrease in workloads but this must be set against the exceptional level of housing starts during the first two quarters of 1997. Companies indicate that they expect private housing starts to increase by 9% by the end of the next quarter.
The decline in the public sector has increased for the third consecutive quarter. However, the rate of decline is expected to slow.
Throughout the UK, the building industry is experiencing a mixed pattern with some regions much busier than others. In the North West, Southern and South West regions members of the Federation report a growth in workload. Members in the North of England and South Wales report a significant decline in workload levels. Other regions report a slight decline but are optimistic due to the increased levels of enquiries.
Overall, member firms expect to increase the size of their workforce during the next quarter. However, the lack of skilled labour continues to cause problems for many firms, especially in Eastern counties, London and the South West. South Wales has experienced the greatest level of redundancies with some 14% of firms laying off labour during the last quarter.
Brian Tierney, FMB's National President, said:
"Encouragingly, the private repair and maintenance market still steadily improves but the steep decline in the public housing sector is disappointing. However, the Chancellor of the Exchequer's announcement that £3.6 billion of capital receipts will be used to refurbish 1.5 million properties over the next three years is most welcome."
Ian Davis, FMB's Director General, added:
"Gordon Brown's intervention is timely. The new funding will equate to levels available a decade ago. But the existing housing stock needs £20 billion investment to bring it up to standard. Workload opportunities for FMB members are now good but economic overheating may occur because of anticipated skills shortages. The new industry Apprenticeship Scheme, starting in August 1998 under the auspices of the Construction Industry Training Board (CITB), and supported by FMB, should encourage builders to re-establish the training ethos."
First posted: 17 July 1998. Last modified: 04 February 1999.
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