SCOTTISH construction firms are back in business with workloads growing faster than at any time since 2007, according to the latest report from the Federation of Master Builders (FMB) Scotland.

The good news was revealed in the FMB’s State of Trade Survey for Q1 2017, which is the largest quarterly assessment of the UK-wide SME construction sector, with key results showing Scottish small to medium-sized businesses (SMEs) reporting their workloads soaring to the highest in a decade.

The report also revealed that one in two construction SMEs predict their workloads to rise even further in the coming months, with just five per cent predicting a decrease in activity.

However, 85 per cent of builders believe that material prices will rise in the next three months and 58 per cent of firms are struggling to hire carpenters, the highest reported level since the financial crisis.

Gordon Nelson, director of FMB Scotland, said: “Scottish construction SME workloads have now risen for five consecutive quarters and rather than tapering off in advance of Article 50 being served, that growth seems to have accelerated in the first quarter of this year.

“At a time of growing concern about the strength of the Scottish economy, the robustness of the construction SME sector is a definite good news story. Even more encouragingly, the number of enquiries for future work has risen solidly and one in two firms are now predicting that their workloads will continue to rise in the coming months.”

The report was compiled by Experian, and in Q1 2017, 322 construction SMEs responded to the survey questions. The results show the number of firms reporting a rise in workload against the number of firms showing no change or a fall to give a qualitative, as opposed to quantitative, overview.

Nelson said that the last three months showed the sector still had challenges to face, such as a growing skills shortage across the country.

He said: “This is not to say that the last three months have been without their challenges. Builders have experienced sharp rises in material prices since the depreciation of sterling in June last year and the subsequent spike in the cost of imported materials and products. Added to this is the rising cost of skilled labour which continues to be exacerbated by the ever-worsening skills shortage. The overwhelming majority of builders expect these trends to continue resulting in further increases in output prices in the next quarter – in layman’s terms, this means that builders will have to pass on these costs to the consumer.”

Nelson concluded: “The biggest concern for builders, however, will be the prospect of weakening consumer confidence. The risk of economic uncertainty impacting on consumer spending was already present due to confirmation of the UK’s departure from the EU and the possibility of another Scottish independence referendum in the medium term. Now that home owners will also be factoring in the UK General Election, Scottish builders may well temper their optimism.

“The repair, maintenance and improvement sector is the staple of most small local builders and is notoriously vulnerable to dips in consumer sentiment. Going forward, the industry is hoping that political stability will be re-established as soon as possible as both consumers and businesses respond best to political certainty.”