According to the BBC, the Federation of Master Builders (FMB) said a fall in workload as well as ever-increasing costs had forced many companies to scale back their operations for the first quarter of 2013.
Its findings also revealed that Scottish companies remained more negative about expected workloads and inquiries when compared to its UK counterparts.
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However, they were less negative than they were in the previous quarter.
FMB Director for Scotland, Grahame Barn, said all work, particularly in the domestic repair, maintenance and improvement market, was very price sensitive.
He said: "To secure work our members are working on minimal margin - if any at all.
"This does not give them any confidence over the short to medium term. This in turn impacts upon employment and apprenticeship places.
"Add to that increasing material and labour costs and the picture for the next quarter remains bleak."
Mr Barn also called on the UK government to review the 20% rate of VAT on domestic repair, maintenance and improvement work, explaining it had "become a charter for rogue builders and the informal economy is hampering legitimate businesses."
(JP/CD)
