More than half of contractors have experienced rising labour costs over the past year but the majority are expecting industry growth over the next 12 months, according to a new survey.
According to Build UK’s state of trade survey for Q4 2015, 60 per cent of contractors reported an increase in labour costs in Q4 2015 compared with the same quarter a year earlier, while 45 per cent reported a quarter-on-quarter increase.
The skills gap also continued to curtail growth, with 16 per cent of firms reporting that labour shortages had resulted in late completion of work during Q4 2015. A further 12 per cent reported that they had been unable to bid for work due to shortage of labour over the same period.
However, most firms remained bullish on the industry’s prospects, with 56 per cent expecting growth in the next 12 months. A net balance of 20 per cent of contractors reported an increase in enquiries in Q4 2015 year on year, led by growth in infrastructure and private housing enquiries.
Profit margins were also on the up, with 38 per cent of firms reporting an increase in Q4 2015 compared with a year earlier against 25 per cent reporting a fall, leaving a net balance of 13 per cent.
The majority of contractors are now operating at over 75 per cent capacity, with just under half operating at over 90 per cent.
Payment, however, continued to be a problem for contractors, with 46 per cent of firms waiting between 46 and 60 days to recieve payment, while 11 per cent waited between 61 and 90 days, despite the fact that only 15 per cent of firms had average contract terms that included payment periods of 46 days or more.