The small construction firms that typically comprise the FMB reveal themselves to be still nervous about taking on any new staff.
The FMB’s state of trade survey for Q3 2019 found the number of companies reporting a growing workforce had fallen, from 19% to 15%, while 23% had reduced their headcount, up from 21% three months ago.
Thus employment levels for SME construction companies remained in negative territory for the second quarter in a row, following a five-year period of positive growth.
Overall construction workloads for FMB members have remained positive with 34% reporting high workloads compared to 27% in the previous three months.
But costs are continuing to go up: 86% anticipate a rise in material prices, up from 77% in the previous quarter; and 56% predict salaries and wages to increase, up from 51% in the last quarter.
FMB chief executive Brian Berry said: “Builders are tired of the continued political uncertainty blighting the UK economy. Stagnating staffing levels is a concerning sign, and if this trend continues, we could see the capacity of the industry shrink at a time when builders are needed more than ever. Skilled workers are scarce in the construction industry, and it is critical we keep people employed in the sector. The fact that SME firms are having to lay people off and are holding off taking new people on is worrying.”
He added: “Small building companies are also having to contend with eye-watering material prices, and these are set to continue to rise. This coupled with continued wage inflation, driven by skill shortages, is leaving many firms to have unsustainable profit margins. This will ultimately mean less money for SMEs to invest and grow for the future, and ultimately could see some firms having to close. The government needs to carefully consider the impact of new regulations that will impose extra costs and cash flow restrictions on the sector such as reverse charge VAT.”