A challenging outlook has prompted a further drop in confidence in the Scottish construction sector, according to the latest quarterly survey of building firms in membership of the Scottish Building Federation (SBF).
SBF’s Scottish Construction Monitor reveals that the industry’s confidence rating north of the border has dropped by nine points since the last survey, now standing at minus 28 – six points below where it was at the beginning of 2011.
The latest survey asked SBF members to provide an overview of the general outlook for the Scottish construction industry over the next year, based on a range of key indicators. These included employment, apprenticeships, and the expected performance of key sectors of the industry, including publicly and privately funded projects, housebuilding, and repair and maintenance.
Two out of three Scottish building firms responding to the survey predict publicly funded construction activity will drop in 2012. A third of firms expect construction employment to fall, outnumbering those predicting a rise in industry jobs this year by a factor of more than three to one.
Most anticipate another tough year for housebuilding and the private sector, with nine out of ten firms anticipating these sectors of the industry to remain stagnant or to decline over the next 12 months.
The survey found around 60% of employers expect the number of workers and apprentices they employ to remain the same over the next 12 months, but more than 30% think the number of people they employ is likely to fall. Official statistics show that the Scottish construction sector has already lost 30,000 jobs over the 12 months to September 2011.
Repair and maintenance emerges as the sector of the industry with the most positive outlook, with more than a quarter of firms predicting activity in this area will rise during 2012. But the outlook for publicly funded construction activity is very downbeat, with almost two thirds of firms predicting output will drop and only 7% expecting activity in this area to go up.
Although expected to perform better than the public sector, private sector construction activity faces limited prospects in 2012, with 44% of employers saying they expect activity to stay the same and 41% forecasting a decline.
Housebuilding – already at an all-time low in terms of units completed annually since devolution – faces a similarly challenging year, with 40% of firms expecting activity to drop again this year and a further 49% believing it will remain static.
Michael Levack, SBF’s chief executive, said the survey results confirm earlier predictions of another tough year ahead for Scotland’s building industry. He said: “The industry has already lost 30,000 jobs in the space of a year. But with more firms anticipating they will have to make redundancies this year than those hoping to recruit, there’s a real prospect that industry employment levels could drop further yet before they start to recover.
“2012 looks set to be a particularly bad year for public sector construction output, with two out of every three employers expecting the level of publicly funded activity to fall.”
Levack argues that there is little prospect of the private sector filling the gap, with 85% of firms expecting privately funded activity either to stay constant or to decline.
“The annual rate of new house building in Scotland is now at the lowest level it has been since current records began in 1997. So the fact that an overwhelming majority of construction firms expect housebuilding activity either to remain static or to fall again in 2012 is a particular cause for concern.
“An excellent place to start would be to start dismantling the huge unnecessary bureaucracy around procurement and planning that has stifled our industry for far too long.”
Scottish Construction Monitor
79 Scottish construction firms completed the survey online or by post between the 17th and the 27th January 2012. Businesses were categorised in terms of size (no. of employees and turnover).
The Scottish Construction Monitor is calculated from the responses to the following: “Overall, how would you describe your confidence in the economic prospects facing your business over the next 12 months, compared to the previous 12 months?”
A score is applied to each response as shown below, and an average score calculated:
Variable Score
Much more confident +100
Slightly more confident +50
As confident 0
Slightly less confident -50
Much less confident -100
Using this method, a Confidence Index of +100 would indicate that all survey respondents were much more confident about future prospects, while -100 would indicate that all survey respondents were much less confident about future prospects.
