Growth in the UK construction sector eased in August amid supply constraints, according to a survey released on Monday.
The IHS/Markit CIPS construction purchasing mangers’ index fell to 55.2 in August from 58.7 in July, missing expectations for a reading of 56.0 and signalling the slowest expansion rate since February.
A reading the 50.0 indicates expansion, while a reading below signals contraction.
Companies widely noted sustained, and severe, supply chain disruption in August, which contributed to an accelerated rise in input prices, and one that was the second sharpest in the history of the survey.
The new orders index fell to a five-month low of 59.4 in August from 60.3 in July.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Formidable supply chain pressures restrained purchasing activity and building projects across the board in August as 68% of construction companies reported even longer delivery times for materials compared to July. A combination of ongoing covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.
“Material and staff costs went through the roof as job hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages. Paying higher wages for experienced staff along with low stocks of materials at suppliers meant inflationary pressure rose at a rate almost on a par with June’s survey record. 84% of supply chain managers reported paying more for their purchases.”
Brock said these obstacles to construction’s progress are set to continue and are now affecting last year’s strongest performer – housebuilding, which will exacerbate the problem of housing supply.
