Construction regains momentum but widespread supply shortages persist
The October construction Activity Index has revealed companies continued to report widespread supply constraints and rapidly increasing prices, although these trends were the least severe since April. There was, however, greater impetus across all sectors, but growth remained much softer than the 24-year high seen in June.
The IHS Markit/CIPS UK Construction PMI® Total Activity Index registered 54.6 in October, up from 52.6 in September, to signal a robust and accelerated rise in output volumes. This index has now posted above the crucial 50.0 no-change value in each of the past nine months and hit a peak of 66.3 in June.
Tim Moore, Director at IHS Markit, which compiles the survey said: ” House building showed the most resilience, as signalled by the fastest rise in residential work for three months. However, the volatile price and supply environment added to business uncertainty and continued to impede contract negotiations. As a result, the overall rate of new order growth was unchanged from the eight-month low seen in September.
“There were widespread reports that shortages of materials and staff had disrupted work on site, while rising fuel and energy prices added to pressure on costs. Nonetheless, the worst phase of the supply crunch may have passed, as the number of construction firms citing supplier delays fell to 54% in October, down from 63% in September. Similarly, reports of rising purchasing costs continued to recede from the record highs seen this summer.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “Activity in the construction sector powered ahead in October with the fastest rise in purchasing for three months as builders continued their summer bounce into the autumn and resorted to forward buying and building stock levels.
“New order growth remained constant but increasing lead times from suppliers made commitment to contracted projects difficult because of the unpredictability of materials arriving on time as reported by over half of all supply chain managers. A slight moderation in input price inflation also gave hope to builders that price rises were receding, which could mean fewer delayed projects as costs were reviewed.”
Gareth Belsham, director of surveyors Naismiths, commented: “After its post-peak Autumn wobble, the construction industry is settling back into a good rhythm. Serious shortages of key materials and skilled workers have been pushing up prices and increasing delays since spring, but in October inflation softened to its lowest level in six months.
“However, this is still far from a return to the boom times of summer. Construction firms are very busy right now, but new orders are coming in at a more modest rate than they did earlier this year.”
SEE ALSO:
