Material shortages are putting huge pressure on supply chains as construction product buyers report their fastest increase in activity for almost a quarter of a century.
The IHS Markit/CIPS UK Construction PMI Total Activity Index soared to 66.3 in June, up from 64.2 in May – its fastest growth spurt for 24 years. However, delivery lead times are extremely stretched and price increases have hit record levels.
According to researchers, the surge in new orders overwhelmed supply chains to the point where stock levels could not keep up with building work that was accelerating at its fastest rate since June 1997.
‘June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace,’ said IHS Markit economics director Tim Moore.
‘Total new orders grew at one of the strongest rates since the summer of 2007, mostly reflecting robust demand for residential projects and a boost to commercial work from the reopening of the UK economy.’
Moore added that supply chains could not keep up with demand, with lead times at their longest since the survey began in April 1997. Survey respondents widely reported delays because of low stocks of building materials, shortages of transport capacity and long wait times for items sourced from abroad.
‘Escalating cost pressures and concerns about labour availability appear to have constrained business optimism at some building firms. The degree of positive sentiment towards the year-ahead growth outlook remained high, but eased to its lowest since the start of 2021,’ said Moore.