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Recession hits firms in Midlands and Northern Ireland hardest

Small to medium-sized construction firms in the Midlands and Northern Ireland are feeling the effects of the recession more than other parts of the UK, according to new figures.

The comprehensive Federation of Master Builders state-of-trade survey for the fourth quarter of 2009 illustrates the regional disparities among small construction firms.

The survey of 2,000 FMB members produces an indicator combining the net balance of firms reporting higher or lower workloads, expected workloads and enquiries in each region.

The results show that a positive balance of small building firms in London, the East and the North of England are reporting improvements in their current workloads, enquiries and expected workloads over the next 12 months.

It is the first time any region has given a positive score since the first three months of 2008 with London improving by the biggest margin from a weighted percentage balance of -29 per cent in Q3 2009 to 5 per cent in Q4.

The regions worst affected by the recession are the East and West Midlands, Wales and Northern Ireland. All saw their score deteriorate, with the West Midlands recording the heaviest fall, from -28 per cent to -64 per cent.

The UK’s position as a whole eased very slightly, from a balance of -25 per cent in the third quarter of 2009 to -24 per cent in Q4. FMB policy manager Peter O’Connell said the Midlands could have been worst affected owing to
its dependence on manufacturing, which has been badly hit by the recession as well.

He said: “The state of the macroeconomy has a knock-on effect on construction, with increased unemployment, for
example, affecting demand for both new housing and housing repair and maintenance work.”

The FMB said that based on the survey’s outlook, 2010 looks sets to begin with a ninth consecutive quarter of deterioration.

There also appears to be a decline in employment numbers among small building firms with 38 per cent of firms reporting a decline in staffing levels, compared with 15 per cent saying their staffing levels had increased.

But looking ahead at the next three months the proportion of firms expecting employment levels to increase has risen compared with the Q3 survey.

Some 23 per cent are expecting an increase with 33 per cent predicting a decrease, compared with the Q3 survey, when the figures were 16 per cent and 31 per cent, respectively.

FMB director general Richard Diment said: “The employment figures from our members’ survey are particularly alarming as, even after seven consecutive quarters of layoffs, 38 per cent of FMB firms reported that they had cut staffing levels.

“Even more alarming is the fact that 33 per cent of FMB firms expect to have to make staff cuts in the first three months of this year.”