Builders are feeling the pinch, seeing their profits tumble as the pressures in the economy mount. Small, local builders are facing an uncertain few months ahead with growing concerns about insolvencies, as they tackle increasing inflation, the knock-on effects of the war in Ukraine and a customer base looking to tighten its belts.
In the most recent State of Trade Survey from the Federation of Master Builders (FMB), a staggering 49% of small builders have had a negative impact on their profit margins in the last quarter. For many small, local tradespeople, these margins are often fairly tight even in the good times. The FMB warns that without clear political and economic direction, during the summer under the caretaker government in Westminster, the industry will face an uncertain future.
The new data indicates an increase in those reporting a rise in workloads for Welsh small builders, with 32% reporting an increase in Q2 2022, compared to 25% last quarter. However, there was an indicative sharp downturn in enquires, with only 11% saying enquires were on the rise, down from a high of 38% last quarter. These figures suggest the market is cooling off, as consumers look to save money.
The FMB State of Trade Survey, which is released quarterly, is the only survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK. The latest survey for Q2 2022 found:
Impact on net profits
- 49% of small, local builders have seen a negative impact on profit margins owing to the current economic climate.
Welsh market activity
- Builders that reported increased workload compared to last quarter sits at 32%.
- 11% reported a rise in enquiries compared to the last quarter.
Market conditions
- 71% of small builders have delayed jobs because of a lack of materials.
- 61% of FMB members have delayed jobs due to a shortage of skilled tradespeople.
- Significantly fewer FMB members report a rise in enquiries, across all areas of work, compared to the last quarter.
- Housebuilding enquiries are down significantly, tracking in negative territory for the first time since the pandemic.
Skills
- 42% of FMB members are finding it difficult to hire bricklayers, up 2% on last quarter.
- 42% of builders are struggling to hire carpenters/joiners, down 3% on last quarter.
Prices
- 98% reported an increase in material costs in Q2 2022.
- 95% of respondents expect material costs to increase in Q3 2022.
- 81% of builders have put up their prices for work.
Ifan Glyn, Director of FMB Cymru, said: “There are early signs that consumer confidence is starting to fade in the face of the cost-of-living crisis, despite members reporting high workloads for now. It is imperative that the UK Government takes immediate and meaningful action before the rot sets in. The longer they wait, the more challenging it will be to turn it around.”
Notes to editors
The Federation of Master Builders (FMB) is the largest trade association in the UK construction industry representing thousands of firms in England, Scotland, Wales and Northern Ireland. Established in 1941 to protect the interests of small and medium-sized (SME) construction firms, the FMB is independent and non-profit making, lobbying for members’ interests at both the national and local level.
The FMB is a source of knowledge, professional advice and support for its members, providing a range of modern and relevant business building services to help them succeed. The FMB is committed to raising quality in the construction industry and offers a free Find a Builder service to consumers.
