Construction SMEs hail growth despite political stalemate

Key results from the FMB’s State of Trade Survey for Q1 2017 - the largest quarterly assessment of the UK-wide SME construction sector - show that one in two construction SMEs predict rising workloads in the coming months, with just 5% predicting a decrease in activity.

However, 85% believe that material prices will rise in the next three months and 58% are struggling to hire carpenters, the highest reported level since the financial crisis.

“Northern Ireland’s construction SMEs have started the year strongly, continuing the positive trends seen throughout 2016,” said Gavin McGuire, FMB director for Northern Ireland.

“In the first three months of this year, builders enjoyed growing workloads, rising numbers of enquiries and are increasingly confident about the future, despite the political stalemate in NI.”

That, he said, begged the question how well it and other core sectors could be performing with strong political leadership and stability.

Though construction was not fullu out of the woods, after the tough years following the financial crisis, he said it was in a much better place than two years ago.

“This progress owes much to robust demand for both new homes and home improvement, the bread and butter of most small local builders.

“However, it should be noted that rising workloads don’t necessarily equate to huge profits as there has been enormous upward pressure on costs for builders. A combination of the depreciation of sterling, which has the effect of driving up the prices of imported materials, and a worsening skills crisis, is inflating output costs considerably.

“This essentially means that the builder is expecting to have to pass these costs onto the consumer. Two in three construction SMEs are predicting that wages and salaries will rise in the coming months, and nearly nine in ten expect further material price inflation. This is making the process of pricing work very complex.”