CPA reports strong Q1 but 'uncertainty' is the theme for Q2

The Construction Product Association’s latest Construction Trade Survey shows that construction activity increased across the supply chain in Q1. This was the twelfth consecutive rise reported by construction product manufacturers representing the beginning of the supply chain, through to main contractors, specialist contractors, SME builders and civil engineers carrying out work on the ground.

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said, “After a slowdown at the end of last year, firms throughout the construction industry experienced a stronger opening quarter in 2016. In spite of this, the clear theme for Q2 is uncertainty, with main contractors reporting lower orders in all sectors as projects are paused or postponed ahead of the EU referendum in June.

“Beyond that, firms continued to indicate that a shortage of skilled workers is the largest threat to construction activity over the rest of the year. Main contractors reported difficulties in recruiting bricklayers, carpenters and plasterers in Q1, whilst low availability of labour was also reflected in upward pressure on wage bills among product manufacturers and civil engineers.”

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Suzannah Nichol, Chief Executive of Build UK said, “There continue to be mixed messages in terms of growth; however, industry intelligence shows increasing levels of activity over the last quarter. Employers are experiencing both rising material and labour costs as they head towards maximum capacity and this continues to highlight difficulties in recruiting appropriate skills at all levels. Build UK is leading the way on the war for talent with its members opening their projects up to the public during Open Doors week in June to attract the brightest talent to projects at a both local and national level.”

Richard Beresford, Chief Executive of the National Federation of Builders, said, “Uncertainty over the outcome of the EU referendum and over the nation’s defining issue – housing – is reflected in slowing industry performance. While homes will continue to be built, as long as there is uncertainty over government policy, we will not be able to provide anywhere near the number of homes people need.”

Key survey findings include:

• 19% of main building contractors, on balance, reported that construction output rose in the first quarter of 2016 compared with a year ago
• A balance of 38% of specialist contractors reported a rise in output during Q1
• On balance, 13% of SME contractors reported increased workloads in Q1 compared to three months earlier
• A balance of 13% of main contractors reported a decrease in orders in private housing and 42% reported a decrease in public new housing orders
• 25% of SMEs and 21% of specialist contractors reported an increase in enquiries in Q1, on balance
• 13% of civil engineering firms reported an increase in new orders in Q1, on balance
• 50% of main contractors reported difficulties recruiting carpenters, 40% for bricklayers and 36% for plasterers in Q1
• Overall costs increased for 74% of civil engineers contractors, whilst 42% of main contractors reported labour costs rose in Q1 compared with the previous quarter
• 100% of heavy side product manufacturers reported that wages and salaries increased from a year earlier