New data suggests stronger signs of recovery for the construction industry in the first half of the year, with SMEs seeing rises in workloads, employment, and more
The State of Trade H1 2025 report, by both CIOB and the Federation of Master Builders, shows that the skills shortage is still a major issue in the construction industry, with the most difficult-to-hire trades including carpenters, roofers, plumbers/HVAC, general labourers, and bricklayers.
Further issues include a 75% rise in materials costs and a 67% rise in wages and salaries, impacting growth. Despite this, conditions in the sector are improving.
Growth is present, but not as large as it could be
Apart from those already mentioned, one of the largest issues holding businesses back is the continued fragile position they find themselves in is the rising costs and wages causing difficulties in tackling the skills crisis, as there is little money left over for hiring new labour.
49% of businesses surveyed in the State of Trade H1 2025 report lower-than-expected profits, or even losses, while 25% feared for their business viability. As a result, 34% have said they are already restricting their recruitment process, while 22% have already made redundancies.
On a more positive note, workloads are increasing, seeing a net increase of 25%, following a -11% in Q4 2024. Furthermore, net enquiries (which suggest current interest levels for new business) is also up by 34% after a -23% in Q4 2024.
There are also numbers suggesting that the difficulty in hiring new staff is loosening its grip, as net employment change hit +26%, the strongest improvement in a quarter since Q1 2010. 39% of firms have seen their workforce size increase, up from 17% in Q4 2024, while only 13% of firms reported a decrease in staff numbers.
Tackling the skills crisis
Several measures have been taken over this year to try to handle the skills gap, with several reforms made in May, including:
- A 32% increase in the Immigration Skills Charge, potentially delivering 45,000 extra training places for the domestic workforce and reducing reliance on migration for workers in priority sectors
- Taking funding away from Level 7 (masters-level) apprenticeships, effective January 2026, for those aged over 21 years old. Funding will be redirected to lower levels
- 13 new Level 2 construction courses for adults in non-devolved areas under the Free Courses for Jobs scheme
- £14m in adults skills funding for construction to be devolved to local mayors in the next academic year, potentially supporting 5,000 new adult learners
- £136m invested in Skills Bootcamps in several sectors, potentially funding 40,000 learners
- £100m over the next four years expanding Construction Skills Bootcamps
10 Technical Excellence Colleges for construction skills opening in September
Writing for PBC Today in August, David Barnes, head of policy and public affairs at the Chartered Institute of Building, said that while reforms and new policy will certainly help, it is the promotion of construction careers that would truly turn the tide.
David wrote: “Our recent report, Attitudes Towards Construction Careers, found construction sector roles did not feature in careers advice for almost half of young people while they were in education.
“With a generally low awareness of young people on the breadth of construction careers available, there is a clear opportunity to better promote construction careers to younger generations who are making key decisions about their future.”
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