A third of companies are expecting to cut their staffing levels, with the VAT increase set to cost 7,500 construction jobs, it is claimed.
FMB director-general Richard Diment said: “The construction sector has still not reached the bottom of the most savage recession for the industry in living memory. Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work. Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.”
Mr Diment continued: “The government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector. The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone. Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen.
“The construction sector has the potential to build Britain out of recession and we know that for every £1 spent on construction output generates a total of £2.84 in total economic activity. If this could be coupled with expenditure on infrastructure projects as well as tackling the growing housing crisis the government would be building the real foundations for a sustained economic recovery.”
The state of trade survey showed that in the final quarter of 2010 the net balance of workload growth was negative for a 12th successive quarter, meaning that the SME construction sector has now seen three years of declining workloads. The proportion of firms reporting higher workloads fell from 31% in Q3 to 22% in Q4, and those indicating declining workloads increased to 38%. There is expected to be no let up at the beginning of 2011 as workloads are expected to contract again. Almost 47% of respondents expect workloads to contract at the beginning of 2011, a significant increase from 34% in Q3. There was also a marked fall in the proportion of firms reporting higher levels of enquiries, which declined from almost 30% in Q3 to just 17% in Q4.
Workloads remained negative across the board with conditions worsening in all sectors with the exception of the social new build housing sector. The proportion of firms reporting higher workloads in that sector rose from 10% in the third quarter to 13% in the final quarter of 2010. In contrast, there was a marked deterioration in public R&M sector workload, as more than half of firms (53%) reported falling levels of work in the sector.
With public spending cuts on the agenda, expectations for public construction were pretty miserable. The outlook for the social RM&I sector saw an especially strong deterioration, as the proportion of firms expecting higher workloads in the sector dropped from 17% in the third quarter of the year to just 3% at the end of the year.
The proportion of firms reporting an increase in their workforce fell to 17% from 20% in the previous quarter. More than half of respondents (55%) anticipate that employment levels will remain unchanged in the
Got a story? Email news@theconstructionindex.co.uk
