Contractors say inflation is hampering growth

Gleeds chief executive Graham Harle

Gleeds’ survey found that more than a quarter of contractors are predicting that tender opportunities will decrease as inflation, continued political instability and the war in Ukraine all sap confidence in the market in the short-term.

88% reported experiencing issues with labour supply over the past quarter, with 96% seeing the cost of labour rising (with worker’s pay attempting to keep up with the rising cost of living).

In tandem with rising wages, the prove of building products and materials continues to rise and nearly 70% of survey respondents said that materials prices show no signs of stabilising.

The longer-term view remains positive, with the prospect of a pipeline defence and energy work, and the transition to net zero.

Gleeds chief executive Graham Harle said: “While there is hope that materials prices will stabilise, the ongoing conflict between Russia and Ukraine is likely to result in spiralling energy costs as alternative supplies are sought so I doubt we have seen the last of price rises. Meanwhile, as the cost-of-living crisis bites, staff expect to see their pay increase in response, and with a dearth of skilled labour available big business is willing to do whatever it takes to get enough boots on the ground to get the job done.

“The Construction Industry Joint Council negotiated a 5% pay increase for site workers, which recently came into effect, and I think we’ll be seeing raises across the board in the months ahead, even though materials and labour cost escalation remains the number one threat to growth according to those we asked.”

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