More than one in four small building companies are reporting increased workloads for the third quarter of 2013 and the number of people they employ has risen for the first time since the end of 2007, according to the latest survey from the Federation of Master Builders. However, the organisation says that the fragile recovery could be threatened by increases in material and labour costs as firms pass these cost hikes on to consumers.
The FMB’s latest State of Trade survey of member firms shows the net balance for workloads, expected workloads and enquiries in the third quarter of 2013 was positive across nearly all parts of the UK for the second quarter in a row.
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In particular, the private new build and residential repair and maintenance sectors saw a marked improvement, and overall 42% of small builders saw their workloads increase. However, material costs, wages and salaries are all expected to continue rising over the next six months, with the result that many building companies may have to put up their prices. In fact, nearly a quarter of respondents anticipated increasing wages and salaries over the next six months. One in seven firms expect material costs to rise in the same period.
However, Brian Berry, chief executive of the FMB, warned that the recovery brought with it dangers. “Construction SMEs have battled to maintain staffing and capacity while trying to keep prices competitive,” he said. “Material costs have remained high throughout 2013, and further increases could snuff out this recovery in its infancy, especially if companies that have cut their profit margins to the bone to beat the recession are now forced to pass on those costs to their customers.”
The report is compiled quarterly using a random rolling sample of FMB member firms.
Respondents are also predicting increasing activity levels over the next three months when compared to the previous quarter. Around a third of firms expect workloads to rise, which is up from 29% in Q2 2013, however, the share of businesses anticipating falling workloads also grew (24% vs 21%).
