11 July 2018

Construction Companies Look To Increase Workforce Despite Cautious Expectations of a Weakening in Output

Results of the first Build UK State of Trade survey for 2018 show that contractors have become more cautious over their prospects. In the short term a modest recovery in workload was anticipated during the second quarter after a first quarter that was disputed by adverse weather conditions, although a general weakening in workload was anticipated for the next twelve months.

The survey, which was undertaken with Glenigan, found that a balance of 9% of contractors expect their workloads to rise in 2018 Q2, but 27% of firms expect their output to fall over the next 12 months.

These more cautious expectations follow a weakening in output and new enquiries during the first quarter of 2018. 40% of firms reported their first quarter output was down on a year ago and 20% reported a year-on-year fall in new enquiries.

Despite the more cautious view on output, 40% of firms were looking to increase their workforce over the next 12 months. This suggests that many firms believe that they are currently understaffed.

Labour availability issues have impacted on contractors’ business performance, with 36% saying that labour shortages had resulted in the late completion of work and over a quarter (27%) reporting that it had prevented them bidding for work.

Overall labour availability remains a concern with 25% of contractors reporting that the recruitment of skilled labour had been more difficult than during the previous three months.

Where contractors had experienced difficulties in recruiting staff, firms cited lack of skills as being an issue in 38% of cases. Lack of experience and required qualifications were cited as factors in 43% and 33% of cases respectively.

Recruitment difficulties are also impacting upon labour costs, with 64% of firms reporting that their labour costs had risen during the quarter and 55% reporting that they were higher than a year ago.

In addition, firms have seen widespread increases in material costs. 82% of firms reported that material costs were higher than during both the fourth quarter of 2017 and a year earlier. Rising labour and material costs have increased overall building costs, with 64% of firms reporting an overall increase in costs during the first quarter.

The full report can be found on the Build UK website.