The Federation of Master Builders

Growth continues to slow for London’s construction sector

Published date: 02 May 2018

The brakes continue to be applied to London’s SME construction sector, as confidence among small builders in London fell for the fourth successive quarter, according to the Federation of Master Builders (FMB) London.

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, include:

  • In terms of workloads, expected workloads and enquiries, the combined indicator for the performance of London’s construction SMEs dropped 5 percentage points in Q1 2018, compared with the previous quarter, to +10%;
  • Though the balance of responses remains positive, this was the fourth consecutive fall since a high watermark of +29% in Q1 2017;
  • 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. 

Barry Mortimer, Director of FMB London, said: “It is disappointing to see a downward turn in growth for London’s construction SMEs for the fourth consecutive quarter. The results of the State of Trade Survey Q1 2018 have confirmed a clear and consistent pattern in London. Confidence and workloads for small builders in London have dropped off over the last year and a range of factors have contributed to these disappointing results. We have had a tricky start to the year in London with the first quarter of 2018 being blighted by snow and freezing temperatures. The heavy snow showers meant many construction sites across the capital ground to a halt in February and March. However the ‘Beast from the East’ was not the only constraint the sector had to contend with.”

Mortimer added: “London’s SMEs are also facing considerable constraints through the growing scarcity of skilled tradespeople. We know that some London-based firms are having to turn work away because they do not have the staff needed. One third of London’s construction workers are from the EU, and more than half of construction SMEs are struggling to hire bricklayers, and carpenters and joiners. Given these headwinds and the slower growth we are seeing, it is more important than ever that the industry has the structural support it needs. With Brexit Day less than a year away, we are calling on the Government to take the skills shortage the sector is facing into account. Policy makers have a duty to guarantee that our new immigration system will work for key sectors, such as construction and house building. The Government’s target to build 300,000 homes every year in England alone won’t be feasible without the workers in place to build these homes.”

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