Growth slows for construction firms amid pressure over supplies
The construction sector last month saw its lowest level of growth since February.
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Your support makes all the difference.The UK’s builders are struggling to keep up with a recent spike in demand and have been left low on supplies, according to an influential survey.
The pressures have helped push the country’s construction sector off the 24-year highs it saw earlier this year.
According to the IHS Markit CIPS UK Construction purchasing managers’ index (PMI), a monthly survey, the sector hit a score of 58.7 in July.
The score still represents growth – anything above 50 is considered positive – but is a big step down from June’s 66.3 – the highest in more than a generation.
It is also the slowest growth in any month since February.
More than eight in 10 businesses said that they had seen prices for raw materials and other costs rise over the period. Only one in 100 said costs fell in July.
Not only have prices gone up, some companies are even struggling to find the materials they need, which has slowed down the sector.
Two thirds of businesses said they had to wait longer for deliveries, putting this down to Brexit friction, congestion at ports and a shortage of transport.
“July data marked the first real slowdown in the construction recovery since the lockdown at the start of this year,” said Tim Moore economics director at IHS Markit.
“It was unsurprising that UK construction companies were unable to maintain output growth at the 24-year high seen in June, especially with widespread supply shortages and constrained capacity to take on additional orders.
“The loss of momentum spanned all major categories of construction work and was most pronounced in the house building sector.”
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said that suppliers did better to meet orders in July than in June. But this was in part because companies were not ordering products that they knew would not arrive on time.
“Faced with transport disruptions, shortages of essentials and Brexit delays, the initial spurt of activity this year is fast hitting the rocks,” he said.
“Building optimism was dampened to the lowest since January as it is difficult to foresee when all these challenges are likely to subside.”