Confidence and workloads for small builders in Scotland took a sharp downward turn at the end of last year, according to a new survey by the Federation of Master Builders (FMB) Scotland.
The trade association’s latest quarterly State of Trade Survey showed that expected workloads and enquiries dropped by 19% in the fourth quarter of 2017 compared with the previous quarter.
The report showed that fewer construction SMEs predict rising workloads in the coming three months, down from 41% in the previous quarter to 38% last quarter.
Gordon Nelson, director of FMB Scotland, said the dip in confidence followed seven consecutive quarters of growth for small builders in Scotland.
He said: “There are several contributing factors, not least the skills shortages which continue to hamper many SMEs, with rising shortages of key trades like carpenters, plumbers and plasterers.
“As a result, the wages for these increasingly scarce skilled trades continue to rise sharply.
“What’s more, material prices are also rising and almost 90% of builders think this trend will continue over the next six months.”
The survey shows the vast majority of builders (87%) believe material prices will rise in the next six months and nearly two-thirds (61%) expect salaries and wages to rise in the first half of this year.
“This means Scottish construction SMEs continue to see their margins squeezed, with many choosing to absorb costs rather than pass them onto their clients,” Mr Nelson added.
The FMB Scotland chief said the Scottish Government’s recently announced a £150 million injection into the Building Scotland Fund could provide a “much needed stimulus” to the sector.
He added: The construction industry is the cornerstone of the Scottish economy so it’s in all of our interests to do what we can to support the smaller companies which form the bedrock of the sector.
“We must collaborate with the Scottish Government to make sure these investments are well-targeted, and tackle the skills crisis.”