More than 80 per cent of contractors are operating at over 75 per cent capacity and almost half at 90 per cent as the skills shortage and fears over Brexit continues, according to the latest report from Glenigan.
In its second State of Trade survey, the industry analysts found that whilst output from Build UK members increased by 22 per cent before the EU referendum – a substantial increase compared to the five per cent and three per cent recorded in the previous two surveys – there is uncertainty around future workloads following the UK’s decision to quit the European Union (EU) with labour supply remaining a cause for concern.
According to the survey, 82 per cent of contractors reported professional and technical employees were either ‘difficult’ or ‘very difficult’ to recruit, while three-quarters of firms cited difficulty in recruiting supervisors and bricklayers, with two-thirds specifying carpenters or joiners and ceiling fixers.
Where contractors had experienced difficulties in recruiting staff, firms cited lack of experience (61 per cent), lack of skills (57 per cent) and a lack of qualifications (41 per cent) as the reasons for the problems.
These difficulties continue to impact upon the cost of labour, with 45 per cent of respondents reporting an increase in labour costs compared to the previous quarter and almost two thirds (65 per cent) reporting higher costs than a year ago.
When considering the upcoming quarter, 19 per cent of contractors anticipate workloads to rise on the results of Q2 2016, with new build infrastructure and commercial sectors expected to be particular growth areas.
However, this result is a decrease of eight per cent from the results of the last quarter (27 per cent) and 11 per cent from the Q4 2015 result (30 per cent), reflecting the increasing uncertainty of the industry pre and post EU referendum.
This feeling of uncertainty continues when assessing the next 12 months. Overall, 21 per cent of contractors still expect their own workloads to rise, however this represents a five per cent decrease on the previous quarter (26 per cent), and a 26 per cent decrease when compared to Q4 2015 (47 per cent). Furthermore, whilst contractors feel that their workloads will be higher in 12 months’ time, they also reported that they believe that the majority of industry sectors will see a decline in output, with only repair and maintenance work in the private other sector experiencing an increase.
In terms of payment, 35 per cent of contractors reported waiting at least 46 days on average despite only 18 per cent having average contract terms of 46 days or more.