The FMB’s State of Trade Survey reveals concerns over falling workloads and rising material costs

The Federation of Master Builders (FMB) has issued a warning over the state of the building industry, as its State of Trade Survey reveals that workloads in the sector fell for the 15th consecutive quarter in Q3 of 2011.

The survey, which analyses economic conditions for small and medium-sized construction firms, reveals that workloads have been falling since 2008, and that one in three builders expects work to trail off further in the final three months of the year.   

Forty-four percent of FMB members reported falling levels of enquiries, and the proportion of firms indicating an increase in the three months to September 2011 declined to just 20%, from 30% in Q2.

Prospects for employment in the sector are largely weak, with the number of firms expecting to increase staffing levels currently at 16%. The percentage of respondents expecting to cut staff fell slightly, however, from 29% in Q2 to 26%.

Builders are also pessimistic about the rising cost of materials, with 88% of those surveyed predicting an increase in prices over the next six months.  

The survey showed positive developments in the private new housing sector, where a one-point improvement took the net balance for the sector to -17, its least negative level for 15 quarters. The level of change being reported fell in the three months to September, with around 47% of firms saying workloads in the division were unchanged, as opposed to 41% in Q2.

In the social housing sector, the number of firms indicating that workloads had risen doubled to 12% from the previous quarter. Around 34% said workload had fallen, however, giving a net balance of -22 – still the least negative result since Q3 2009.

While funding for social housing has been cut heavily for the 2011-15 period, work is still coming through from projects which received funding in round two of the Kickstart scheme and from the final funding allocations under the 2008-11 National Affordable Housing programme.

Commenting on the overall picture, director-general of the FMB Richard Diment said: “When the chancellor delivers his speech today to the Conservative Party conference he needs to be mindful that the building industry is in a dire state with little hope in the immediate future that things are going to get better. It is hard to think of another period in living memory when the building industry has been so badly hit by an economic crisis. The chancellor needs to understand that a recovery in the construction sector is essential if it is to deliver economic growth in the wider economy.”