3 July 2017
Winter Slowdown Doesn’t Dampen Contractor’s Spirits
Results of the fourth State of Trade survey for 2016 show that whilst Build UK members’ enquiries and output slowed during the winter period, contractors anticipate growth in 2017.
The survey, which was undertaken with Glenigan, shows that output growth slowed during the fourth quarter of 2016. Contractors reported fewer enquiries, especially for new private housing, commercial and industrial projects, both against the preceding three months and the corresponding period in 2015.
Despite weakening enquiry levels, contractors expect their workloads to increase during the current quarter and throughout 2017. Overall, 8% of contractors expect their workloads to rise next quarter and 33% of firms expect their output to rise over the next 12 months.
Recruitment difficulties are still impacting upon labour costs, with 30% reporting an increase in labour costs compared to the previous quarter and just over half (53%) reporting their labour costs to be higher than a year ago. These recruitment difficulties are affecting contractors’ business performance; 13% said that labour shortages had resulted in the late completion of work, while 21% had been unable to bid for work during the last quarter.
Cost pressures are not just limited to labour costs. 66% of firms reported an increase in their material costs during the fourth quarter of 2016. Higher labour and material costs have increased overall building costs, however the higher cost base is not being reflected in tender prices with a balance of 4% reporting a fall in tender prices during the fourth quarter. This has inevitably increased pressure on margins, with a balance of 12% of firms experiencing lower margins against both the previous quarter and a year earlier.
To see the full Q4 State of Trade Report for 2016, visit the Build UK website.