143 views

Construction demand stays strong for small to medium-sized firms in quarter following Brexit vote

Francesca Washtell
Follow Francesca
Spurred By Rising Prices, Phoenix Undergoes A New Housing Boom
SMEs won't have to battle for consumer demand but growth in other areas has fallen (Source: Getty)

Consumer demand for building work stayed strong in the three months following the EU referendum, according to the Federation of Master Builders (FMB).

The continuing skills shortage and growing cost of doing business are the greatest challenges to construction firms, rather than demand, the FMB’s survey of small and medium-sized companies found.

The positive growth runs counter to expectations about the sector in the wake of a pro-Brexit vote, though growth slowed compared to the “buoyant” first half of the year and parts of the UK went into decline.

Read more: Review demands government intervention to save the construction industry

Flatlining growth in the London market was “concerning”, the FMB said, and showed the construction skills shortage, which is pronounced in the capital and the South East, was “starting to bite”.

Around two-thirds of SMEs struggled to hire bricklayers in the third quarter, while 55 per cent found it difficult to source carpenters and joiners. Leaving the EU could also result in the sector having a less flexible workforce, as 12 per cent of workers are of a non-UK origin and form “a vital part of a labour force that is already stretched”.

“Ongoing workloads for construction SMEs remained remarkably resilient in the months following the referendum vote, suggesting that consumer demand – which accounts for the bulk of SME work – has held up far better than anticipated,” said Brian Berry, chief executive of the FMB.

Read more: Construction PMI improves in August – but fails to match manufacturing

“If we all agree that construction is a “weather vane” industry, and demand for home improvement and new build homes an important gauge of consumer confidence, then our results chime with the cautious positivity demonstrated across construction and the wider housing market.”

The FMB's report is good news for the sector, after construction output missed economists' expectations in the wake of the pro-Brexit referendum result. Activity in the sector, which accounts for around six per cent of the UK economy, dropped by 1.5 per cent between July and August, the Office for National Statistics (ONS) said last week.

Related articles