Business

Ninth consecutive rise in construction output for SMEs

Construction SMEs in the north have reported their ninth consecutive quarter of growth according to the latest figures from the Federation of Master Builders (FMB)
Construction SMEs in the north have reported their ninth consecutive quarter of growth according to the latest figures from the Federation of Master Builders (FMB) Construction SMEs in the north have reported their ninth consecutive quarter of growth according to the latest figures from the Federation of Master Builders (FMB)

THE construction sector continues to prosper in the north, with companies reporting their ninth consecutive quarter of growth.

In spite of political uncertainty, new figures from the Federation of Master Builders (FMB) show a continued resurgence in construction output, with workloads and enquires up across the UK.

The report for the first quarter of 2017 shows the construction sector in the north has grown for nine consecutive quarters, with the performance of SMEs continuing positive trends reported throughout 2016.

The Northern Ireland net balance, which combines workload, expected workload and enquiries is at its highest (+27) since the second quarter of 2016 and up by 17 points on the last quarter of the year.

In the UK-wide figures the survey has revealed that one in two construction SMEs predict rising workloads, but crucially 85 per cent of builders believe material prices will rise in the next three months.

Over half of the firms (58 per cent) said they were struggling to hire carpenters, the highest reported level since the financial crisis.

Director of FMB Northern Ireland Gavin McGuire said the results showed confidence in the local construction sector.

"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 Northern Ireland," he said.

"This progress within the SME building industry owes much to robust demand for both new homes and home improvement, the bread and butter of most small local builders.”

Mr McGuire cautioned however that rising workloads didn't necessarily mean hugh profits, with builders now experiencing an enormous upward pressure on costs.

"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.”

"Not only are businesses contending with considerable cost inflation, they are also contending with continued political uncertainty in the ongoing absence of a Government in Stormont, or indeed a budget."

He added: "This uncertainty will no doubt be further exacerbated by the surprise announcement of a snap UK General Election in June.

"Consumer confidence cannot be taken for granted and there is a risk that home owners will eventually tighten their belts in reaction to these multiple unknowns – this could present a real threat to the longer term revival of construction SMEs in Northern Ireland."