{"id":97341,"date":"2021-08-05T10:49:43","date_gmt":"2021-08-05T09:49:43","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=97341"},"modified":"2021-08-05T10:49:43","modified_gmt":"2021-08-05T09:49:43","slug":"construction-pmi-july","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-pmi-july\/97341\/","title":{"rendered":"Initial spurt of construction activity hits the rocks"},"content":{"rendered":"

UK construction recovery slowed in July, as raw material supply shortages and shrinking subcontractor availability impacts the industry<\/h2>\n

July PMI\u00ae data compiled by IHS Markit<\/a> and CIPS<\/a> highlighted that the recovery in UK construction output lost momentum since June, with slower growth seen in all three main categories of work.<\/p>\n

With demand for construction materials<\/a> continuing to outstrip supply, latest data signalled another steep increase in purchasing prices.<\/p>\n

Around 81% of the survey panel reported an increase in their average cost burdens during July, while only 1% signalled a decline.<\/p>\n

The seasonally adjusted UK Construction PMI index registered 58.7 in July, down sharply from June’s 24-year high of 66.3<\/a> but still well above the crucial 50.0 no-change threshold.<\/p>\n

The latest reading signalled the slowest overall increase in construction output since February.<\/p>\n

Construction PMI breakdown<\/h3>\n

Housebuilding was the best-performing category in July’s construction PMI (index at 60.3), followed closely by commercial building (59.2). In both cases, the rate of expansion was the weakest since February.<\/p>\n

Civil engineering activity (55.0) followed the momentum seen elsewhere in the construction sector during July, with growth easing sharply since June and the lowest for five months.<\/p>\n

Total order books continued to improve in July, but the latest rise in new work was the weakest since March.<\/p>\n

Similarly, input buying expanded at the slowest pace since April amid a softer recovery in demand. Construction companies also noted that reduced materials availability had acted as a brake on purchasing volumes in July.<\/p>\n

Around 66% of the survey panel reported longer wait times for supplier deliveries in July, while only 2% signalled an improvement in vendor performance.<\/p>\n

A rapid pace of input cost inflation continued in July, fuelled by supply shortages<\/a> and robust demand for construction items.<\/p>\n

Higher charges among subcontractors and difficulties filling staff vacancies also added to price pressures. The latest decline in subcontractor availability was the second-fastest since the survey began in 1997, exceeded only by that seen during the lockdown in April 2020.<\/p>\n

Optimism toward future output growth remained historically high, the index drifted down to its lowest for six months in July.<\/p>\n

\u2018Transport disruptions, shortages of essentials and Brexit delays\u2019<\/h3>\n

\u2018Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “The pace of growth in the construction sector slowed sharply in July as all three PMI surveys showed slower growth in the UK economy.<\/p>\n

\u201cThe pervasive weaknesses in supply chains along with a lack of staff and contractor availability were laid bare as construction lost some of its get-up-and-go.<\/p>\n

“The rampant rise in prices for raw materials and transportation continued to be the construction\u2019s heavy load along with historically long delivery times. Though there was a slight improvement in supplier performance from June\u2019s record low, it was partly as a result of frustrated supply chain managers reining back on purchases that were unlikely to arrive when needed.<\/p>\n

\u201cBusinesses were also unable to expand on staff capacity, where even the most prolific hiring periods since 2014 was insufficient for builders\u2019 ability to complete work in hand.<\/p>\n

“Faced with transport disruptions<\/a>, shortages of essentials and Brexit delays, the initial spurt of activity this year is fast hitting the rocks. Building optimism was dampened to the lowest since January as it is difficult to foresee when all these challenges are likely to subside.”<\/p>\n

\u2018A catch-22\u2019<\/h3>\n

Jan Crosby, head of infrastructure, building and construction at KPMG UK<\/a>, said: \u201cThe UK construction sector continues to chomp at the bit for new projects, but overall growth has slowed for the first time this year as builds are still being affected by the ongoing global supply chain problems, which in turn are causing significant delays in deliveries and price rises for materials.<\/p>\n

\u201cIn addition, lorry driver shortages mean stock that does arrive here in the UK is often delayed further due to logistical setbacks, and on site construction slows down when workers need to self-isolate.<\/p>\n

\u201cCombined, this is creating a catch-22, which could impact how well the sector recovers and grows over the coming months.\u201d<\/p>\n

Fraser Johns, finance director at construction firm Beard<\/a>, added: \u201cIt\u2019s clear that the current challenges facing the construction industry are now undermining the post-pandemic recovery we\u2019d seen during the first half of the year.<\/p>\n

\u201cSupply chain delays, materials shortages, price rises, logistical problems, skills shortages and even the \u2018pingdemic\u2019 all conspired in July, resulting in the slowest rate of output since February.<\/p>\n

\u201cWe know these are challenges that are not set to go away any time soon, so in order to move forward it\u2019s going to be crucial to take a proactive approach.<\/p>\n

\u201cWorking in collaboration with suppliers and subcontractors, including ensuring prompt payment, will go some way to mitigate the risk of projects falling through.<\/p>\n

\u201cBut customers need to be aware of the issues facing the industry is facing as well. Being transparent at the point of submitting tenders about the need to order certain materials early to ensure delivery on time, using two stage procurement processes, will help to overcome some of these issues.\u201d<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

UK construction recovery slowed in July, as raw material supply shortages and shrinking subcontractor availability impacts the industry.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[583,54592,908,974],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-97341","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-construction-products","8":"tag-coronavirus","9":"tag-economy","10":"tag-pmi"},"acf":[],"yoast_head":"\nInitial spurt of construction activity hits the rocks<\/title>\n<meta name=\"description\" content=\"UK construction PMI recovery slowed in July, as raw 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