The FMB comments on worrying ONS figures

Published:  12 June, 2018

Brian Berry from the FMB puts construction output fall down to The Beast from the East, rising costs and Brexit.

The ONS released new figures for the industry yesterday, showing:

• Construction output continued its recent decline in the three-month on three-month series, falling by 3.4% in April 2018, the biggest fall seen in this series since August 2012

• The three-month on three-month decrease in construction output was driven by falls in both repair and maintenance and new work, which fell 3.0% and 3.7% respectively

• Following three consecutive months of contraction in the month-on-month series at the start of 2018, construction output experienced a slight bounceback in April 2018, increasing by 0.5%.

• Total construction new orders also decreased in Quarter 1 (Jan to Mar) 2018, falling by 4.6%, driven by the continued fall in all other work new orders.

Brian Berry (pictured), Chief Executive of the FMB, said: “The UK construction sector declined by 3.4% in the three months from February to April compared with the previous three months. This is the biggest fall since the latter stages of the recession in August 2012. The Beast from the East has certainly played its part as it forced many construction sites to close in March. Indeed, builders were reporting that it was too cold to lay bricks.”

“Alongside the cold snap, the drop in construction output can also be attributed to rising costs for construction firms large and small. While wages are continuing to rise because of the acute skills crisis in our sector, firms are also feeling the pinch thanks to increased material prices. The depreciation of sterling following the EU referendum has meant bricks and insulation in particular have become more expensive. We expect material prices to continue to squeeze the construction industry with recent research by the Federation of Master Builders showing that 84 per cent of builders believe that they will continue to rise in the next six months.”

Berry concluded: “In the medium to longer term, with nine months until Brexit-Day, the future is uncertain for the UK construction sector. The Government is still to confirm what the post-Brexit immigration system will look like. The construction sector is largely reliant on accessing EU workers with more than 8 per cent of construction workers coming from the EU. It is therefore imperative that the sector knows how, and to what extent, it can recruit these workers post-Brexit.”

Michael Thirkettle, Chief Executive of McBains, said: “Today’s statistics prove the construction sector is still in troubled waters with continuing uncertainties, borne from Brexit, and the poor value of sterling impacting on the cost of imported materials, meaning many UK companies are delaying investment decisions.

“The real test, however, will be in the months to come, given the uncertainty over issues like Brexit that have impacted on UK companies’ commitment to new projects over the last two years.”

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