Construction sector growth continues but skills concerns remain

Construction Products AssociationActivity in the UK construction sector rose for the eleventh consecutive quarter in Q4 led by growth across almost all areas of the industry though recruitment and labour problems persisted, according to new figures.

Published today, the Construction Products Association’s latest Construction Trade Survey saw firms report new building activity in the private housing, commercial and infrastructure sectors.

Almost a quarter of main building contractors (23 per cent) reported that construction output rose in the fourth quarter of 2015 compared with a year ago as did 31 per cent of specialist contractors. Six per cent of SME contractors reported increased workloads and enquiries in Q4 compared to three months earlier.

A balance of 25 per cent of main contractors reported an increase in orders in private housing, whilst industrial orders were higher for 6 per cent. Public housing orders decreased in Q4 according to 55 per cent of main contractors.

However, 60 per cent of main contractors reported difficulties recruiting carpenters, 50 per cent for plasterers and 47 per cent for bricklayers in Q4 while 41 per cent of main contractors reported labour costs rose in Q4 compared with the previous quarter.

Rebecca Larkin, senior economist at the CPA, said: “It is encouraging that growth continues to be reported across the entire construction supply chain. 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, however.

“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.

“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.”

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