Activity in the Scottish construction sector continued to fall at the end of last year, as financial constraints and a challenging economic environment hit the industry.
A net balance of -7% of Scottish respondents to the Royal Institution of Chartered Surveyors (RICS) survey said that workloads fell, compared to +10% in the third quarter. In the UK as a whole, workloads were reported to be flat.
This trend of a slowdown in activity corresponds with a negative outlook from Scottish surveyors too, with -12% of respondents expecting that workloads will fall over the next 12 months, down from -1% in the third quarter and +25% in the second.
Looking at the current workloads, all sub-sectors saw a slowdown in activity, with both public and private housing experiencing the steepest slowdowns.
In the final quarter of 2022, -2% of respondents reported a fall in public housing, down from +27% in the previous quarter, while -8% of respondents reported a fall in private housing, down from +15% in the third quarter.
Although there is still a skills shortage across the industry in Scotland, it was slightly less pronounced than in previously quarters.
The the fourth quarter, 58% of surveyors reported a shortage of quantity surveyors, down from 60% in the third quarter.
Shortages in construction professionals fell from 62% in the third quarter to 54% in the fourth and shortages of bricklayers fell from 59% to 55% quarter-on-quarter.
With continued labour and material cost pressures, respondents in Scotland remain relatively downbeat about the outlook for profit margins.
The final three months of 2022 was the sixth quarter in succession that there was a negative net balance regarding the 12-month outlook for profitability, with -40% expecting profit margins to decline, down from -26% in the third quarter.
The outlook for employment is more resilient though, with respondents pointing to a flat picture over the year ahead.
Zander Muego, a partner at Thomas & Adamson in Edinburgh, said: “There is a lack of specialist subcontractor organisations with the capacity to deliver large volume projects.”
Andrew Park, pre-construction director at Robertson Partnership Homes in Stirling, commented: “There is insufficient government funding for social and affordable housing to keep pace with inflation.”
Gary Campbell, a development surveyor with Cruden in Glasgow, added: “Inflationary increases in labour, plant and materials are becoming unsustainable for clients.”
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