Growth in Wales' construction sector has slowed dramatically, with workloads barely rising and enquiries falling sharply amid deepening skills shortages and mounting cost pressures.
Wales' construction industry saw a sharp slowdown in H2 2025, with workload growth nearly stalling and enquiries falling significantly compared to earlier in the year. Rising costs and an intensifying skills crisis mean homeowners face higher prices, longer delays, and in some cases cancelled projects, according to the latest State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB).
Overall workloads in Wales increased by just +7% in the second half of 2025, a dramatic decline from +24% in H1 2025, marking the weakest performance across all UK home nations. Enquiries also fell sharply to +14%, down from +50% in the first half of the year, signalling mounting uncertainty in the Welsh construction market.
Despite these challenges, demand continues for repair, maintenance and improvement work, but persistent problems around recruitment, spiralling costs and project delays are putting severe pressure on SMEs, who make up the backbone of Wales' construction sector.
Skills shortages intensify
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72% of firms were affected by a lack of skilled tradespeople, up from 61% in H1 2025, leading to job delays (49%) and cancelled projects (22%).
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30% of firms said the skills shortage halted plans to expand their company.
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The hardest trades to recruit were carpenters (30%), bricklayers (29%) and plumbers/HVAC trades (23%).
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Specialist skills remain scarce: 51% of firms struggled to hire workers with knowledge of the building safety regime, 57% with sustainable building practices, and 58% with new technologies.
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58% of firms found it difficult to recruit staff with knowledge of conservation/heritage techniques, while 56% struggled to find workers with knowledge of new planning proposals.
Rising costs continue to squeeze Welsh builders
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75% of firms reported rising material costs in H2 2025.
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57% experienced wage increases, while 61% raised the prices they charge to keep pace with costs.
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The impacts of cost pressures remain stark: 51% reported lower-than-expected profits or losses, 34% restricted recruitment, 20% feared for business viability, and 16% made redundancies.
Delays and payment challenges add to pressure
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40% of firms said projects were delayed due to extreme weather or climate events, while 36% cited planning delays.
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35% pointed to market uncertainty as a cause of delays, and 31% to material or equipment delays.
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Only 57% of Welsh builders said invoices were paid within agreed terms, while 13% reported invoices are often paid late.
Outlook remains cautiously positive despite challenges
Despite mounting pressures, Welsh builders remain more optimistic than pessimistic: 48% have a positive outlook for the first half of 2026, compared with 8% who are negative and 38% who are neutral.
However, concerns about policy changes are widespread: 47% expect changes to National Insurance contributions to have a negative impact on the construction industry, and 46% expect the Chancellor's recent budget to negatively affect the sector.
Ifan Glyn, FMB Cymru Director commented: "Despite the sharp slowdown in workloads and enquiries, it's encouraging that Welsh builders remain cautiously optimistic about the months ahead. However, conversations I'm having daily with members reveal a clear sense of nervousness. The economy remains fragile, and recent tensions in the Middle East are further denting consumer confidence. Whilst the direct impact has been limited so far, a prolonged conflict could drive up the cost of energy-intensive materials like steel and cement, adding to already mounting cost pressures."
Glyn continued: "Wales's builders are ready to deliver the homes and economic growth our communities need, but in uncertain times they need a Welsh Government that backs them. That means a clear plan to build more homes, invest in our ageing housing stock, accelerate planning reform, and support skills development. With the Senedd elections approaching, we'll be engaging closely with all political parties to push for real commitment. It is crucial that the next Welsh Government acts quickly to remove barriers and strengthen the resilience of the sector."
