The Scottish Construction Monitor is a survey of around 700 individual construction firms that make up the membership of the SBF.

The expectation of weak performance across a range of industry sectors in 2012 means the industry’s confidence rating has dropped by nine points since the last survey and now stands at minus 28 – six points below where it was at the beginning of 2011.

Two out of three Scottish building firms responding to the survey expect publicly funded construction activity to 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. And most anticipate another tough year for housebuilding and the private sector, with nine out of ten anticipating these sectors of the industry to remain stagnant or decline over the next 12 months.

The survey found around 60% of employers expect the number of workers and apprentices they employ within their business 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 overall, with more than a quarter of firms predicting activity in this area will rise during 2012.

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.

SBF chief executive Michael Levack said the survey results reconfirmed earlier predictions of another tough year ahead for Scotland’s building industry. “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,” he said.

“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. That’s a natural consequence of the cuts to public funding that will take effect over the next few years. But this survey finds little prospect of the private sector filling that 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.”

Mr Levack concluded: “Over the coming months, I hope the industry can work constructively with government at all levels to start rebuilding confidence that has been shattered by the economic downturn. 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.”

Main findings of the Scottish Construction Monitor survey:

• Industry confidence has witnessed a further decline this quarter, down nine points compared to Q3 2011 (the last available survey period), and now stands at minus 28.
• The new confidence rating is now six points below the level of industry confidence recorded at the beginning of 2011.
• The percentage of respondents who are more confident about their prospects for the next 12 months compared to the past year has fallen from 19.3% in Q3 2011 to 15.2% this quarter, while the percentage of respondents less confident about their firm’s future prospects has risen from 46.1% in Q3 2011 to 55.7% this quarter;
• A substantial majority of firms responding expect the number of workers and apprentices they employ to remain the same during 2012. However, the proportion of firms expecting employment to decline within their business this year is around four times higher than the percentage expecting employment to rise;
• Almost two thirds of respondents expect publicly funded construction activity to fall in the course of 2012, while only 7% believe public sector construction activity will rise;
• The general outlook for private sector construction is relatively more positive with 15% of respondents expecting activity in this sector to go up in 2012. However, two in five firms expect this sector of the industry also to decline with the remaining 44% expecting private sector construction activity to remain stable;
• The outlook for the housebuilding sector is muted with only 10% of respondents expecting activity to increase in 2012, almost half anticipating that activity will remain static, and the remaining 40% forecasting that housebuilding will dip further this year;
• The survey results suggest repair and maintenance is likely to be the best performing sector of the construction industry in 2012 with 26% anticipating a rise in activity, just over 50% believing the sector will remain stable, and only 23% expecting activity to drop.

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