Construction industry growth picks up despite supply pressures

The IHS Markit/CIPS UK Construction purchasing managers’ index hit a reading of 54.6 for October, up from 52.6 in September.

Henry Saker-Clark
Thursday 04 November 2021 10:21
The UK construction sector saw growth rebound in October (Ben Birchall/PA)
The UK construction sector saw growth rebound in October (Ben Birchall/PA)

Growth in the UK’s construction sector picked up pace again last month despite supply disruption impacting firms, according to new figures.

The closely followed IHS Markit CIPS UK Construction purchasing managers’ index (PMI) hit a reading of 54.6 for October, up from 52.6 in September.

Any reading above 50 is seen as a sector in growth.

Tim Moore director at IHS Markit, said: “UK construction companies achieved a faster expansion of output volumes in October, despite headwinds from severe supply constraints and escalating costs.”

More than half of surveyed businesses reported longer delivery times among suppliers, with only 2% seeing any improvement.

Delays were overwhelmingly linked to haulage driver shortages and international shipping congestion.

Meanwhile, the latest data also signalled another steep rise in input costs although the overall rate of inflation slipped to a six-month-low.

Around 73% of companies said they saw an increase in purchase prices in October, flagging rising energy and commodity prices.

Nevertheless, activity in the sector improved on the back of particular improvement in the house-building sector, which reported a reading of 55.4 for the month.

Mr Moore added: “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.”

The report said this resulted in the overall rate of new order growth staying flat at the eight-month low seen in September.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said: “With rising optimism and employment levels builders seem confident that the next 12 months will be rosier.

“However, with the squeeze on supply and staff shortages, it is far from guaranteed that uncertainty and instability are behind us just yet.”

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