Confidence has dipped among contractors in the wake of the Brexit referendum, according to the latest trades survey from BuildUK.
The survey, which was conducted with Glenigan, covered the second quarter of this year and found that many believe all construction sectors bar repair and maintenance will see a decline in output.
The results come as analysis from Barbour ABI showed that spending on infrastructure suffered a sharp decline in July. It said the value of contracts dropped 20% in July to £1.5bn compared to June.
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Of the contractors surveyed by Build UK, 21% anticipated that workloads would rise over the next 12 months, but this was 5% lower than the previous quarter and 26% lower than Q4 2015.
Furthermore, whilst overall contractors felt that their own workloads would increase in 12 months’ time, they also said they believed there would be a decline in output from the majority of sectors across the industry.
Labour supply appeared to be the area of biggest concern with 82% of those surveyed reporting that professional and technical employees were either “difficult” or “very difficult” to recruit.
Three-quarters of firms cited difficulty in recruiting supervisors and bricklayers, with two-thirds specifying carpenters or joiners and ceiling fixers.
Contractors reported that difficulties arose in recruiting staff due lack of experience (61%), lack of skills (57%) and a lack of qualifications (41%).
These difficulties continue to impact upon the cost of labour, with 45% of respondents reporting an increase in labour costs compared to the previous quarter and almost two thirds reporting higher costs than a year ago.
The results of the survey come as spending on infrastructure suffered a sharp decline in July following the EU vote the previous month, with the value of contracts dropping 20% to £1.5bn compared to June, according to Barbour ABI.
According to the August edition of Barbour’s Economic & Construction Market Review, construction new orders were down to £5.8bn in July, a month-on-month drop of £400m.
Along with infrastructure, the other prominent sector in construction was residential, which saw a decrease of 7% in contract value and a drop of 2,000 units compared to the previous month.
However, some sectors performed well with the value of contracts for commercial office construction in July increasing by 22% compared with June, worth a total of £648m on the month. £250m of that total came from the west midlands development Paradise Circus, an eight-storey office block.
The industrial sector also performed well in July with its value the highest it’s been so far in 2016, reaching £564m, greatly helped by the commissioning of Reckitt Benckiser’s £100m new global centre for scientific excellence in Kingston-upon-Hull.
Michael Dall, lead economist at Barbour ABI, said: “In the first full month since the vote to leave the European Union, the value of construction projects reaching contract award stage declined in July. This is unsurprising given the uncertainty in the economy.
“However, it is the infrastructure sector which has performed particularly poorly this month and with the change in narrative from the current government, it puts more emphasis on any fiscal stimulus that they may be planning to make.”
