SME builders rebound, but skills and costs bite

The UK’s small and medium-sized builders report a sharp rebound in activity in the first half of 2025 but warn that acute skills shortages and rising input costs are constraining delivery and profitability, according to the latest SME State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB).

Across Q1–Q2 2025, workloads rose by a net +25%, reversing a –11% decline in Q4 2024. Enquiries climbed to +34% (from –23%), and employment improved to +26%, the strongest quarterly change since 2010. Growth was led by house building and maintenance, with all home nations in positive territory: Northern Ireland (workloads +36%, enquiries +64%), Scotland (+30%, +56%), Wales (+24%, +50%) and England (+21%, +18%).

However, firms face severe capacity pressures. The most difficult roles to fill were carpenters (33%), roofers (32%), general labourers (29%), plumbers/HVAC (28%) and bricklayers (28%). Overall, 61% of respondents were affected by a lack of skilled trades, leading to delays (49%) and job cancellations (23%). Although 39% increased headcount (up from 17% in Q4 2024), 34% restricted recruitment and 22% have already made redundancies.

Costs remain elevated, with 75% reporting higher material prices and 67% higher wages and salaries. Nearly half (49%) recorded lower-than-expected profits or losses, and one in four (25%) fear for business viability.

Brian Berry, chief executive of the FMB, said: “After a tough end to 2024, it’s welcome to see the construction sector turning a corner in the first half of 2025. However, recruitment remains a major challenge, with carpenters, roofers, and plumbers among the hardest roles to fill… Increased costs have led to lower-than-expected profits for nearly half of respondents, and one in four now fear for their business’s viability.”

Paul Gandy, CIOB president, added: “SMEs are the backbone of our construction industry – they deliver the homes our communities depend on… If we want the construction industry to be sustainable, we must make it easier for smaller firms to thrive. That means tackling issues such as late payments, and ensuring SMEs can affordably hire apprentices to grow the skilled workforce our sector desperately needs.”

Looking ahead, 51% of firms have a positive outlook for the second half of 2025. The FMB/CIOB survey, which received 458 responses, is now run biannually and remains the only UK tracker focused exclusively on construction SMEs.