Scottish construction output drops slightly to £14.5bn

construction worker stockScotland’s construction industry generated total output of £14.5 billion last year, a modest decline on record output of £14.7bn during 2015, according to new official figures issued today by the Office for National Statistics.

Output from the housing, private commercial and repair and maintenance sectors of the industry were all up year-on-year.

But output from the infrastructure sector of the industry declined from a record high of £4.2bn during 2015 to £3.1bn in 2016.

The Scottish Building Federation said while the figures were “encouraging”, only a reduced reliance on major infrastructure projects would ensure a continued and balanced recovery for the sector.

Scottish Building Federation managing director, Vaughan Hart, said: “There has been encouragingly strong performance from the housing, private commercial and repair and maintenance sectors of the Scottish construction industry last year. Output from the housing sector rose by 16%, largely driven by an increase in private housebuilding. The private commercial sector was also strong, rising 6% to more than £2.6bn, the highest it’s been since 2008.

“We’ve also seen good output in repair and maintenance, rising 5% to more than £4.1bn. On the other side of the equation, infrastructure output has dropped significantly and private industrial activity is at a new low, partly prompted by the removal of empty property rates relief which is a policy we have consistently campaigned against.”

Mr Hart added: “Overall, these are encouraging results which suggest that the industry is moving in the right direction in terms of achieving a balanced recovery across different sectors, hopefully with a reduced reliance on major infrastructure projects to drive future growth as other key sectors such as housing, commercial and repair and maintenance continue to show strengthening performance.

“We will be watching closely to see if this momentum continues into 2017. However, that is obviously very much dependent on how the wider economy performs and there is still a good deal of uncertainty about future economic prospects just now.”

UK-wide construction output fell by 0.4% in January 2017 compared with the previous month although output grew on a 3 month on 3 month basis by 1.8%.

All new work showed signs of flattening out with growth of 0.1% in January 2017, but continued to grow in the latest 3 months compared with the previous 3 months at a rate of 2.1%.

Overall annual construction output growth has increased for 2016, to 2.4% from 1.5%, due to upward revisions for all 4 quarters, including a revision of 0.8% in Quarter 4 (Oct to Dec) 2016, from 0.2% to 1%.

New orders fell by 2.8% in Quarter 4 of 2016, driven mainly by falls in private industrial and private commercial work.

Despite new orders falling in Quarter 4 of 2016, the annual volume of new orders is now at its highest level since 2008.

With Scottish Apprentice Week finishing today, Allan Callaghan, managing director of housebuilder Cruden Homes West, responded to the statistics by urging the sector to continue to keep recruiting and developing young people to build a skilled and talented workforce.

Mr Callaghan said: “It’s encouraging to that annual construction output has increased to 2.4% as this sector continues to play a vital role in supporting Scotland’s economy. However, we can’t ignore the fact the sector is suffering from an ageing workforce with widening skills gaps.

“This week’s Scottish Apprentice Week has put a spotlight on the value of apprenticeships to construction employers. It’s vital that we continue to keep recruiting and developing young people to build a skilled and talented workforce.

“We desperately need to build more new, affordable houses and, with the requirement for over 12,000 new workers over the next five years, there’s never been a better time to encourage young people into this thriving sector.

“Much more than hard hat jobs, it’s a flourishing industry that is home to varied careers including engineering, surveying, marketing, architecture, planning and much more.

“At Cruden, we’re about to begin the process of recruiting 15 new apprentices and they will become part of the 50 strong team of apprentices that we train every year. Employers of all sizes need to play their part in changing perceptions of a career in construction and showcase the variety of roles on offer to attract the next generation of talent.”

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