The Construction Product Association’s latest Construction Trade Survey shows that activity in construction rose for the eleventh consecutive quarter in Q4 2015. Growth is being led by new building activity in the private housing, commercial and infrastructure sectors but skills shortages remain the biggest risk.
Rebecca Larkin, senior economist at the CPA, said, “A shortage of skilled on-site labour remains the largest threat to construction activity over the coming months, however. Half of main contractors found it difficult to recruit bricklayers, carpenters and plasterers in Q4, which continues to exert upward pressure on wage bills and raises the concern of whether expected volumes of work can be delivered.”
Overall, the near-term outlook appears positive, as firms from construction product manufacturers at the beginning of the supply chain to specialist contractors, SME builders and civil engineers carrying out work on the ground reported modest increases in enquiries, orders or anticipated sales for Q1 and the 12 months ahead. Main contractors’ order books suggest some weakness in Q1.
Growth will continue to be led by work in the private housing, industrial and infrastructure sectors, but there are clearly areas that are languishing. Activity and orders were reported to be lower in public housing, which reflects the headwinds facing housing associations and local authorities amid recent policy decisions. Orders were also reported to be lower for repair and maintenance (R&M), both housing and non-housing, in Q4.
Suzannah Nichol, chief executive of Build UK said: “Whilst we are continuing to see growth in construction the market is very mixed and the difficulties in recruiting the right skills are causing very real concerns as labour costs rise.”
Paul Bogle, head of policy and research at the National Federation of Builders, said: “While costs and the recruitment of skilled tradesmen remain an issue, we could be seeing the start of a trend as public housing output declines. It is highly unlikely the Government will realise its aspiration of building one million homes by 2020 without a strong house building public sector. Without more widespread access to small sites for SMEs the increases in private house building numbers can not be sustained over the longer term.”