‘Glimmer of hope’ as builder output slowly recovers

Signs of stability returning to the building industry offer a “glimmer of hope for the future”, as workloads are up seven per cent over the last three months, according to the latest Federation of Master Builders (FMB) report.

Master builder companies reported output recovering in the FMB’s latest State of Trade Survey Q2 2024,) which represents more than 7,000 SME building companies and sole traders in the UK.

The survey found improvements to market conditions as net change in workloads was up by 7 per cent on Q1 2024 and enquiries were up 3 per cent.

Employment over Q2 2024 improved significantly (net change -2 per cent from the -11 per cent reported previously).

Meanwhile, 54 per cent of FMB members reported no changes in employment levels in Q2 2024 compared with the previous quarter, however, 43 per cent of members reported shortage of skilled tradespeople resulting in job delays, up from 36 per cent in Q1 2024.

In terms of changing prices and costs, 64 per cent of members reported increased material costs in Q2 2024, down from 69 per cent in Q1 2024. 

Increased outgoings led to 67 per cent of members increasing the prices they charge, with 52 per cent reporting that their business is on track to make a loss or fall below expected margins.

Cost pressures have resulted in 10 per cent of members reporting making staff redundant or terminating contracts slightly up from 9 per cent previously.

FMB chief executive Brian Berry said: “While this represents a clear improvement on the challenging market conditions SME builders were experiencing in late 2023, and offers a glimmer of hope for the future, there is still substantial room for improvement.

“Increasing workloads are a positive sign that the construction industry is slowly growing, however, firms are continuing to face difficulties in recruitment, which has been an ongoing issue. 

“It’s also worrying to see a significant rise in the number of businesses reporting lower than expected profits this quarter 55 per cent, up from 44 per cent in Q1 2024.

“The new Government has used its early weeks in office to announce promising plans to boost house building rates and reform the planning system, which may result in a much needed economic stimulus. 

“However, the UK is currently experiencing a construction skills crisis, and concerns remain about viability without the workforce in place to deliver new homes.” 

The FMB expressed certain caution over the prime minister’s launch of Skills England, a new government organisation to address the ‘broken and fragmented’ skills and training system.

Industry bodies including FMB welcomed the organisation but Berry noted in a statement that the details about how it will operate remain light. 

“We need to see a long-term skills plan to deliver the Government’s ambitions for growth”, he added.

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