Sustained Construction Growth but Doubts Prevail

19 May 2016 | Updated 01 January 1970

The Construction Product Association’s latest Construction Trade Survey shows that construction activity increased across the supply chain in Q1 but with worries for skills and materials shortages.

This was the twelfth consecutive rise reported by the CPA in its Q1 2016 survey of construction product manufacturers representing the beginning of the supply chain, through to main contractors, specialist contractors, SME builders and civil engineers carrying out work on the ground.

It noted that after a slowdown at the end of 2015 businesses throughout the construction industry experienced a stronger opening quarter in 2016. In spite of this, the clear theme for Q2 appeared to be uncertainty with main contractors reporting lower orders in all sectors as projects were paused or postponed ahead of the EU referendum in June.

“Beyond that, businesses continued to indicate that a shortage of skilled workers is the largest threat to construction activity over the rest of the year,” stated Rebecca Larkin, Senior Economist, CPA. ”Main contractors reported difficulties in recruiting bricklayers, carpenters and plasterers in Q1, while low availability of labour was also reflected in upward pressure on wage bills among product manufacturers and civil engineers.”

The Key survey findings include:

19% of main building contractors, on balance, reported that construction output rose in the first quarter of 2016 compared with a year ago.
A balance of 38% of specialist contractors reported a rise in output during Q1.
On balance, 13% of SME contractors reported increased workloads in Q1 compared to three months earlier.
25% of SMEs and 21% of specialist contractors reported an increase in enquiries in Q1, on balance.
13% of civil engineering firms reported an increase in new orders in Q1, on balance.
50% of main contractors reported difficulties recruiting carpenters, 40% for bricklayers and 36% for plasterers in Q1.
Overall costs increased for 74% of civil engineers contractors, while 42% of main contractors reported labour costs rose in Q1 compared with the previous quarter.
100% of heavyside product manufacturers reported that wages and salaries increased from a year earlier.

“There continue to be mixed messages in terms of growth; however, industry intelligence shows increasing levels of activity over the last quarter,” observed Suzannah Nichol, CEO Build UK, the construction contractors organisation. ”Employers are experiencing both rising material and labour costs as they head towards maximum capacity and this continues to highlight difficulties in recruiting appropriate skills at all levels.”

Picture: The latest CPA survey shows continued growth but concerns for skills shortages in particular with rising materials coming a close second

Article written by Mike Gannon | Published 19 May 2016