Scotland sees 12 per cent increase in construction output

office_for_national_statisticsNew official output figures from the Office of National Statistics have shown that Scotland had seen the greatest improvement in construction activity output in the UK as a whole.

The vast majority of the 12 per cent overall increase north of the border in the year to June was from infrastructure projects, with the private homes sector just 4 per cent ahead.

The Federation of Master Builders Scotland welcomed the figures but said addressing the widening skills gap in the construction industry was key to unlocking significant growth in the sector.

Director Gordon Nelson said there was a long way to go before the building trade in Scotland was back to pre-recession levels, and skills issues were a major obstacle on the horizon.

“This week I’ve met FMB Scotland members from Shetland to Jedburgh,” said Mr Nelson.

“Whilst the local markets in which they operate in differ, what they share, regardless of where they are, is the challenge to attract and retain skills within the construction sector.

“There is a recovery within Scotland’s construction sector, but continuing to service this recovery is both a current and ongoing challenge.”

Scottish Building Federation managing director Vaughan Hart said the figures were encouraging but there was work to be done to ensure the recovery was “suitably balanced” across the industry.

“The rise in output has been largely driven by a substantial rise in infrastructure output, up 63 per cent over the 12 months to June 2014 compared to the preceding year. At the same time, there is evidence that the ongoing decline in output from the house-building sector may finally be stabilising,” he said.

“Notably, output in private sector housing actually rose by 4 per cent over the 12 months to June this year.

“Clearly, there is still more work to be done to ensure that the recovery of the industry is suitably balanced across all sectors. We now need to see the rise in headline output start to feed through to a growth in industry employment.”

Ed Monaghan, chairman of Construction Scotland said continuing stability in construction is good news for everyone.

He added: “These statistics from ONS confirm what we have been seeing throughout the industry in Scotland for the past few months – buoyancy within the sector, increased client and industry confidence and an increasingly bright future.

“A key focus for Construction Scotland and the future of construction in Scotland is encouraging more innovation to support even more growth. Those working in the sector are key to delivering this.

“Indeed innovation will be a key topic at our inaugural conference in Glasgow on 7 October where we officially launch the Construction Scotland Innovation Centre which connects Scotland’s 31,000 construction businesses with academic expertise. This unique partnership between the industry, academia and Government, aims to be a catalyst to drive growth and profit in the construction industry in Scotland.”

Kier Construction Scotland managing director Brian McQuade, said “hardly a week” now went by without a major Scottish construction project coming to fruition.

“The stability in the construction output figures is positive news for an industry that has demonstrated increased buoyancy in recent months,” Mr McQuade said.

He added: “The continued growth we are experiencing is great news – not just for Kier but for the industry as a whole - as well as local communities, who are benefiting from the economic boost and the creation of local jobs for local people.”

Construction consultancy Turner & Townsend said concerns over Scotland’s future is “spooking investors south of the border too”.

Steve McGuckin, global property director, said: “Such tepid rates of growth confirm that no-one should expect miracles from the construction industry.

“Uncertainty over Scotland’s future path has inevitably held back growth north of the border, but across the UK order books and levels of confidence remain robust. Yet the momentum the industry has built up during the past year cannot be taken for granted.

“Private sector housing is still the most obvious success story, with strong residential demand now triggering building across most of the country. In some areas housebuilders have over two years’ worth of orders on their books, and momentum enough to keep building.

“But other sectors are raising their game too, which is very encouraging. Infrastructure output has finally snapped out of reverse to rise by 3.3 per cent in July, even though its year-on-year slump of over 9 per cent means it still has a long way to go.

“Yet the industry cannot continue to rely on residential building as its primary engine of growth.

“The point is driven home by the new orders figures, which show that orders for private sector housing projects slipped by 6.3 per cent in the second quarter.

“Fortunately other sectors are taking up the slack. New orders for infrastructure rose by a barnstorming 20.8 per cent in the same period, and new orders for private commercial sector properties were up by 9.6 per cent.

“The prospect of an interest rate rise and its likely chilling effect has receded, but the elephant in the room is Scotland. These figures show the state of the industry before the referendum forced its way onto the front pages, but the long lead times involved in construction mean many Scottish projects have been kept on hold ever since the referendum was announced.

“With concerns over Scotland’s future now at risk of spooking investors south of the border too, there is a danger that the confidence built up so painstakingly could be eroded.”

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