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.
On balance, only 4% 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.
The third quarter’s growth rate was also significantly lower than the previous two quarters.
In Q2, a net balance of 17% of firms reported an increase in output, while in Q1 this balance was 50%.
This data tallies with recent figures from the Office for National Statistics, which reported that construction output fell 2.2% during Q3.
The CPA survey suggested contractors remained highly reliant on private housing, with a balance of 25% of firms reporting growth in this sector during Q3.
A further 6% of firms on balance recorded growth in private commercial work, while 10% saw growth in housing repair and maintenance and 7% in public non-housing.
However, public new housing saw a significant fall, with a net balance of 16% of contractors reporting decline during the quarter.
Non-housing R&M (15%) and private industrial (7%) also recorded negative balances.
Order books fell across the board for contractors in Q3 compared with the previous quarter.
On balance, 42% of firms reported a decline in public housing orders, while a balance of 22% of contractors saw orders fall in the industrial sector.
Elsewhere, a balance of 20% of contractors reported lower orders in private commercial, while a further 7% on balance recorded a fall in public non-housing orders.
Despite this, a balance of 25% 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% posted in Q2, but was nevertheless among the highest figure recorded in the past two years.
A balance of 17% of large building contractors expect workloads to grow over the next 12 months, up significantly from the balance of 3% reported in Q2.
However, Q3’s expectations were still markedly below the high of 60% reported in the same quarter a year earlier.
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 past 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% of building contractors, 93% of product manufacturers and 44% of SMEs.
“Increasing activity over the next year threatens to make these labour supply issues even more acute.”