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 Scotland there were particular factors affecting the market:
Scottish market conditions
- There has been an indicative small increase in the number of builders in Scotland reporting an increase in workload, with more reporting an increase than decrease.
- The future of work looks less healthy with a huge indicative decline in enquiries from 50% to 8%, but still more members report increased enquiries than those reporting fewer.
Gordon Nelson, Scotland Director of the FMB, said: “For builders who concentrate on delivering repair, maintenance, refurbishment and renovation works to homes and buildings, this last quarter has been fairly strong with more FMB members seeing an increase in workloads than a decrease. There are worrying signs are on the horizon though, with a sharp drop off in enquiries, which doesn’t bode well for fuelling a healthy pipeline of works for Scottish builders as we approach winter.”
Nelson continued: “House building continues to struggle with more members reporting less workloads than there are reporting more. There has also been a sustained decline in enquiries, suggesting the picture will continue to worsen. Housing has featured heavily in the political discourse over the last few weeks, in some corners more than others, but this data should highlight just how difficult a time the industry is having, when the UK is desperate for new homes”
Nelson concluded: “The survey has also highlighted the continued cost pressures that wages, and building materials are exerting on builders who are having to put up prices to protect their margins. Scotland’s local builders support other sectors of our economy by building and maintaining our built environment. So it is vital that we retain the skills and business base across our construction industry. We look to both the Chancellor’s Autumn Statement and greater collaboration with the Scottish Government to steady the waters.”
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.
Skills
- 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.
