Small building companies in the UK are facing a significant downturn in workloads, enquiries, and employment, with 40% of members of the Federation of Master Builders (FMB) reporting a decrease in the number of work enquiries, according to the latest State of Trade Survey released by the FMB.

While the repair, maintenance, and improvement (RMI) sector remains relatively robust, there is growing concern within the industry about the declining state of housebuilding, which is struggling to keep pace with demand.

Brian Berry, Chief Executive of the FMB, expressed his concerns, stating, “The RMI sector remains fairly strong this quarter, with more FMB members still seeing an increase in workload than a decrease, but worrying signs are on the horizon with a sharp drop-off in enquiries.”

He continued, “House building continues to struggle with more members reporting fewer workloads than those reporting more. There has also been a sustained decline in enquiries, suggesting the picture will continue to worsen. Housing is rising up the political agenda as evidenced at the recent party conferences, and this new data highlights why the Government should be concerned at a time when we need to be building more, not fewer, new homes.”

The FMB’s latest survey for the third quarter of 2023 revealed several key findings:

Market Conditions:

•  A decrease in total workload, enquiries, and employment, primarily driven by underperforming housebuilding and industrial and commercial sectors.
•     40% of FMB members reported a decrease in enquiries.
•     RMI reported workloads remain positive but have dropped since the second quarter of 2023.

Skills Shortage:

•     Difficulty in recruitment has slightly increased.
•     39% of members are struggling to hire carpenters, while 35% are facing challenges in hiring bricklayers.
•     There has been a sharp upturn in difficulty hiring general labourers, with 34% reporting problems (up from 25% in Q2).
•     Half of FMB members report that jobs are delayed because they are struggling to hire skilled workers.

Impact of Prices and Costs:

•     71% of members report that material costs increased in Q3 2023, with 55% expecting this trend to continue into the next quarter.
•     Increased outgoings have led to 71% of members increasing the prices they charge, with half reporting that their businesses are on track to make a loss or fall below expected margins.
•     Over a quarter report that they are restricting hiring new staff as a consequence of increased outgoings.

The FMB State of Trade Survey, released quarterly, is the longest-running survey of its kind, tracking the experiences of small to medium-sized construction firms in the UK. With these concerning findings, industry experts and policymakers will be closely monitoring the construction sector and considering potential measures to support its recovery.