There has been a sharp decline in workloads, enquiries, and employment, amongst small building companies with 40% of FMB builders reporting a decrease in the number of work enquiries according to the latest State of Trade Survey from the Federation of Master Builders (FMB).
The good news is that the repair, maintenance and improvement (RMI) sector continues to remain buoyant with most FMB members reporting increased workloads.
For members in Wales there were particular factors affecting the market:
Welsh market conditions
- There has been an indicative significant decrease in the number of builders in Wales reporting an increase in workload (54% in Q2 to 14% in Q3).
- The future of work has stagnated with enquiries at 0%, meaning there is an equal number of members reporting increases and decreases in enquires.
Ifan Glyn, Director of FMB Cymru said: “It is encouraging to see the workloads of builders involved in the repair, maintenance, and home improvements market remaining buoyant. However, people are clearly thinking twice before commissioning future works, hence the drop-off in enquiries. This reflects the uncertain economic outlook and the impact this is having on people’s confidence to spend. There is still a backlog of unmet demand for builders which is keeping our members busy, but if enquiries continue to fall, this will inevitably at some point impact their workloads. The survey results from the fourth quarter could therefore be particularly interesting.”
Glyn continues: “The survey also highlights the rising costs that builders are contending with, which is forcing them to increase their prices. How sustainable this is in the long run is yet to be known, with members already reporting that they are restricting the hiring of new staff as a consequence of increasing costs.”
Glyn concluded: “House building continues to struggle, with the rise in mortgage interest rates having a significant impact. This is of concern, as house building supply was already failing to meet demand before this became issue. The Welsh Government need to double down on their efforts to support the sector to deliver new homes.”
The latest survey for Q3 2023 found across the UK:
- There has been a decrease in total workload, enquires and employment over Q3 of 2023, seemingly driven by a poor performing housebuilding and industrial and commercial sectors.
- 40% of FMB members reported a decrease in enquiries.
- RMI reported workloads remain positive, but have dropped off since Q2 2023.
- Overall, difficulty in recruitment has slightly increased.
- 39% of members are struggling to hire carpenters with 35% struggling to hire bricklayers.
- There has been a sharp upturn in difficulty hiring general labourers, with 34% reporting problems (up from 25% in Q2)
- Half of FMB members report that jobs are delayed because they are struggling to hire skilled workers.
Impact of changes in prices and costs
- 71% of members report that material costs increased in Q3 2023 with 55% expecting this to continue into the next quarter, which is an improvement on previous quarters.
- The impact of increased outgoings has led to 71% of members increasing the prices they charge, with half reporting that the business in on track to make a loss or fall below expected margins.
- Over a quarter report that they are restricting hiring new staff as a consequence of increased outgoings.
The FMB State of Trade Survey, which is released quarterly, is the longest running survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK.