SMEs report falling workloads and rising costs

According to the Federation of Master Builders’ (FMB) latest State of Trade Survey Q3 2024 Workloads are down 7 per cent on the previous quarter. 

The survey focuses exclusively on small and medium-sized (SME) firms throughout the construction sector. 

It also found that 32 per cent of members reported a decline in workloads, with 41 per cent seeing no change. 

Enquiries, meanwhile, were down 3 per cent in Q2 of 2024 and employment continued to decline in Q3, seeing a 4 per cent drop in the second quarter.

Brian Berry, chief executive of the FMB said: “The State of Trade Survey for Q3 2024 reveals a challenging economic climate for small building companies across the UK 

“Enquiries are also down, as is employment, with over a third of members struggling to recruit bricklayers and carpenters. 

“What is concerning is that the poor numbers reported by builders seem to be here to stay as they have been a constant throughout 2024.

“The last time such a negative trend was reported was in the years following the financial crisis of 2008.”   

In terms of skills, 23 per cent of members reported a decrease in the number of employees, which is similar to Q2 (24 per cent) but lower than Q1 2024 (28 per cent).

Of its members, 38 per cent reported a shortage of skilled tradespeople resulting in job delays.

Specific skills

• 35 per cent of members struggled to hire carpenters, down from 41 per cent in Q2 2024.
• 28 per cent struggled to hire bricklayers, down from 29 per cent  in the previous quarter.
• 34 per cent struggled recruiting general labourers, up from 26 per cent in Q2 2024.
• 16 per cent struggled to hire roofers, up from 13 per cent.
• 13 per cent struggled recruiting painters and decorators, increased from 11 per cent.

Elsewhere, around 65 per cent of members indicated that rising costs led to higher prices for their services, decreasing from 67 per cent in Q2 2024.

Of those who experienced rising costs, 54 per cent reported lower-than-expected business profits or financial losses, a slight increase from 52 per cent in the previous quarter.

More than a quarter of respondents (26 per cent) said cost pressures caused them to restrict their recruitment plans and 10 per cent revealed that their business viability was compromised, putting them at risk of closure.

The survey follows the Labour’s first budget which committed an extra £3 billion to support SMEs and the Build to Rent sector by expanding existing housing guarantee schemes.

In September, the Department for Business and Trade also announced new measures to support SMEs in tackling late payments which cost SMEs £22,000 a year on average and lead to 50,000 business closures a year.

Berry added: “The Government missed a key opportunity in the October Budget to announce serious funding to tackle the skills crisis in Britain while tax rises, such as the increase to employers’ National Insurance contributions, creates additional barriers with firms already struggling to recruit staff. 

“The Government needs to prioritise boosting construction skills if it is serious about having a high-quality construction industry capable of delivering the ambitious housebuilding targets it has set out.”

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