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Scottish builders missing out on UK upturn

THE UK construction industry has recorded its best performance in six years but the Scottish housebuilding sector has yet to see the results of the upturn, according to surveys.

BRIGHTER OUTLOOK: Philip Hogg of Homes for Scotland said recent construction sector indicators were more positive. Picture: Nagy-Bagoly Arpad
BRIGHTER OUTLOOK: Philip Hogg of Homes for Scotland said recent construction sector indicators were more positive. Picture: Nagy-Bagoly Arpad

The Markit/CIPS purchasing managers' index (PMI) for construction reached a reading of 62.6 in November, meaning the seventh straight month of expansion. The reading, where a mark of 50 separates growth from contraction, was also the highest since August 2007.

Within the PMI, housing activity was said to be at its highest since 2003, buoyed by Government schemes such as Help to Buy.

Markit chief economist Chris Williamson said the housing figures suggested the number of new home being started had risen to between 40,000 and 45,000 per quarter in recent months, up from 28,000 at the end of last year.

That was in sharp contrast to Scottish Government statistics released yesterday showing there were 12,897 new-builds started in the 12 months to the end of June this year, which is 8% behind the previous period. However, there was an improvement between April and the end of June with the 3521 starts, which is 6% ahead of the same three months in 2012.

Private sector housing remains the biggest part of the industry with the 2659 starts in the second quarter of the year at a similar level to results since mid-2009.

Scottish Building Federation managing director Vaughan Hart said: "These latest statistics illustrate continued challenges for house-building and the wider construction industry.

"Private sector activity remains slow, with less than 10,000 units completed during the year to June. This points to the importance of sustaining initiatives such as Help to Buy so they can start having a real and positive impact on the industry."

Philip Hogg, chief executive of industry body Homes for Scotland, indicated there have been brighter signs in Scotland in recent months. He said: "These figures are obviously disappointing but not a surprise with the continuing drop in output now stretching five years.

"However, there is a significant time lapse in these statistics and other more up-to-date indictors signal a more positive situation. Taking these together with the recent introduction of the Help to Buy (Scotland) shared equity scheme, which is already making a big impact, we now need to ensure that this increased activity in the housing market is sustained in order that it translates into the building of much needed new homes - across all tenures."

The construction PMI for the UK also showed commercial projects growing and civil engineering continuing to expand.

There was rising confidence across sub-sectors while credit conditions were also said to be improving.

Mr Williamson said: "The survey indicates that the construction upturn is not simply predicated on a housing market boom fuelled by Government initiatives and low borrowing rates."

That view was echoed by Howard Archer, economist at IHS Global Insight, who added the strong run of recent data will lead to expectations GDP in the fourth quarter may grow more than the predicted 1%.

He said: "If consumer spending gains appreciable momentum as Christmas gets ever nearer, fourth quarter growth prospects for the economy will be looking very bright."

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