All sectors on the up but cost fears dog construction

Grant Prior 8 years ago
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Activity rose across all areas of construction during the second quarter of 2014 – but future growth is being put at risk by rising costs.

The latest Construction Trade Survey highlighted rising activity for building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

Dr Noble Francis, Economics Director at the Construction Products Association, said:  “Firms across construction reported rises in output during Q2 and the majority of the industry is expecting activity to rise over the next 12-18 months.

“Tender prices rose in Q2.  Many major contractors are still working on projects won in 2013 at relatively low prices but have been suffering from the key concerns of rising costs and skills availability, especially in specific sectors such as private new housing.

“Overall, 80% of building contractors reported, on balance, that costs rose over the past year; 95% reported that materials costs rose over the past year and 75% reported that labour costs rose over the past year.

‘In terms of skills, 47% of building contractors reported that bricklayers and carpenters were difficult to recruit.”

Richard Beresford, Chief Executive of the National Federation of Builders, added:  “The good news is construction output is rising.

“However, higher tender prices, materials and labour costs and difficulty in securing skilled labour at reasonable cost all highlight the fragility of this recovery.”

Key survey findings for Q2 include:
41% of building contractors reported that private housing output was higher than a year ago;
46% of building contractor firms reported public non-housing (education and health) output was higher than a year ago;
37% of building contractors reported that private commercial output was higher than a year ago;
58% of firms reported tender prices were higher than a year ago;
80% of building contractors reported that total costs were higher than a year ago;
95% of building contractors reported materials costs were higher than a year ago;
75% of firms reported that labour costs were higher than a year ago;
Profit margins rose for the first time since the financial crisis six years ago (according to 5% of building contractors);
14% of specialist contractors reported being paid within 30 days, the highest recorded throughout the survey;
47% of building contractors reported difficulty recruiting bricklayers and carpenters.

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