Materials shortages bite into construction recovery

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Buyers reported another slowdown in construction growth in September, blaming disruptions on site from unavailable transport, a severe lack of materials and staff shortages, alongside a softening of demand.

September saw a rapid drop in subcontractor availability, according to buyers, while some firms noted that the unpredictable pricing environment had slowed clients’ decision-making on new orders and led to delays with contract awards.

The headline IHS Markit/CIPS UK Construction PMI Total Activity Index fell to 52.6 in September (where 50.0 indicates no change) from 55.2 in August and further below June’s record high of 66.3.

All three categories of construction slowed in September, with civil engineering reporting the biggest drop in momentum (51.0, down from 54.8 in August).

Housebuilding also decelerated in September, with the latest expansion the weakest since the recovery began in June 2020 (52.8). The commercial segment (53.6) was the best-performing category during September.

Construction companies recorded a “moderate” increase in new work during the month but the rate of growth fell to its weakest since the start of 2021. There was a strong rise in employment numbers in construction over the month driven by greater workloads, but the rise in staffing levels was the slowest since April, reflecting long wait times to fill vacancies.

Around 78% of buyers reported a rise in their cost burdens, linked to supply shortages and transport charges.

Nonetheless, construction firms remain upbeat about the business outlook with 51% forecasting rising output and only 8% anticipating a decline.

Tim Moore, director at IHS Markit, which compiles the survey said: “September data highlighted a severe loss of momentum for the construction sector as labour shortages and the supply chain crisis combined to disrupt activity on site.

“The volatile price and supply environment has started to hinder new business intakes as construction companies revised cost projections and some clients delayed decisions on contract awards. As a result, the latest survey data pointed to the worst month for order books since January’s lockdown.

“Shortages of building materials and a lack of transport capacity led to another rapid increase in purchase prices during September. There was also a considerable decline in the availability of subcontractors, with survey respondents citing shortages of bricklayers, drivers, groundworkers, joiners, plumbers and many other skilled trades. Measured overall, prices charged by subcontractors increased at the fastest rate since the survey began in April 1997.”

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