Output growth for contractors has fallen to its slowest rate for more than two years, according to the Construction Products Association’s state of trade survey for Q3 2015.
According to Construction News, only 4 per cent of building contractors reported that construction output rose in Q3 compared with a year earlier.
This was the 10th consecutive quarter of increasing activity, but also the lowest level of growth since Q1 2013.
Q3’s growth rate was also significantly lower than the previous two quarters.
In Q2, a net balance of 17 per cent of firms reported an increase in output, while in Q1 this balance was 50 per cent.
This data tallies with recent figures from the Office for National Statistics, which reported that construction output fell 2.2 per cent during Q3.
The CPA survey suggested contractors remained highly reliant on private housing, with a balance of 25 per cent of firms reporting growth in this sector during Q3.
A further 6 per cent of firms on balance recorded growth in private commercial work, while 10 per cent saw growth in housing repair and maintenance and 7 per cent in public non-housing.
However, public new housing saw a significant fall, with a net balance of 16 per cent of contractors reporting decline during Q3.
Non-housing R&M (15 per cent) and private industrial (7 per cent) also recorded negative balances.
Order books fell across the board for contractors in Q3 compared with the previous quarter.
On balance, 42 per cent of firms reported a decline in public housing orders, while a balance of 22 per cent of contractors saw orders fall in the industrial sector.
Elsewhere, a balance of 20 per cent of contractors reported lower orders in private commercial, while a further 7 per cent on balance recorded a fall in public non-housing orders.
Despite this, a balance of 25 per cent of SMEs reported higher workloads in Q3, marking the 10th consecutive quarter of workload growth for smaller firms.
This was slightly down from the 28 per cent posted in Q2, but was nevertheless among the highest figure recorded in the last two years.
A balance of 17 per cent of large building contractors expect workloads to grow over the next 12 months, up significantly from the balance of 3 per cent reported in Q2.
However, Q3’s expectations were still markedly below the high of 60 per cent reported in the same quarter a year earlier.
Commenting on the survey, CPA economics director Noble Francis said: “A downturn in public housing work was expected, given the proposed changes to housing benefit, Right to Buy and social rent cuts in the July Budget.
“Of more concern is the fall in new orders in private housing and commercial, which have driven the construction recovery over the last two years.
“Although the overall outlook is largely optimistic, the impact of a shortage of skilled labour continued to manifest itself, not just in difficulties recruiting bricklayers and other onsite trades, but in rising wage bills.
“In Q3, labour costs were higher for 75 per cent of building contractors, 93 per cent of product manufacturers and 44 per cent of SMEs.
“Increasing activity over the next year threatens to make these labour supply issues even more acute.”