New research has revealed rising material prices are continuing to impact upon small and medium-sized (SME) construction firms.

The Federation of Master Builders' (FMB) latest State of Trade Survey reports that in the first three months of this year, SME workloads grew slightly but at a slower rate than compared with the final three months of 2017.

However, 90% of builders reported increasing material prices in Q1 2018, the highest reading on record, with 84% of builders believing that material prices will; continue to rise over the next six months.

In addition, the skills crisis is continuing to have an impact. More than half (58%) of construction SMEs are struggling to hire bricklayers, while 55% are struggling to hire carpenters and joiners. As a result, two-thirds (66%) of construction SMEs expect salaries and wages to increase during the next six months, up from 62% in the previous quarter.

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Yet despite rising material costs, SMEs are predicting increasing workloads in the coming three months, up from 38% in the previous quarter to 49% in Q1 2018. And with workloads remaining positive in Q1, the SME sector has now enjoyed five years of consecutive growth.

Brian Berry, Chief Executive of the FMB, said workloads are continuing to growth despite the 'Beast from the East' "wreaking havoc" across UK construction sites.

"However, once again, the growth we are seeing is slower than in the previous three months and this can be partly attributed to pressure from rising costs," he said.

"Indeed, 90% of builders reported increasing material prices in the first three months of 2018 and this is the highest reading on record. Insulation, bricks and timber are the materials that have increased the most and builders are predicting that these price increases will continue.

"We are also seeing increased salaries for tradespeople stemming from the acute skills crisis and that, coupled with material price hikes, are squeezing margins and stifling growth for construction firms of all sizes."

(LM/MH)