A closely watched industry survey revealed that UK builders struggled to keep up with the demand for new homes and maintenance work in July due to a lack of materials and skilled staff leading to slower growth.
After setting a 24-year high in June, Construction industry The growth rate last month was the lowest level since February. Previously, companies hoarding materials in the first half of this year began to experience insufficient inventory, while other companies were unable to find enough workers to complete the inflated orders.
Analysts said that with the reopening of the economy, most of the industry’s future looks very optimistic, and once the pressure on the supply line begins to ease, sustained high growth may be re-established.
The IHS Markit/Cips UK Construction Purchasing Managers Index fell to 58.7 in July. This score still represents growth-anything above 50 is considered positive-but it showed a clear slowdown after 66.3 in June.
More than eight in ten companies said that during this period, they have seen price increases for raw materials and other costs. Only one in ten said that costs fell in July.
Industry bosses said that price increases and shortages of cement, copper and steel have delayed some projects already in progress and some planned projects.
Two-thirds of companies said they have to wait longer to deliver goods. This boils down to Brexit friction, Port congestion and transportation shortage.
The survey agency Rics’ assessment of the industry found that 82% of companies said that material shortages hindered the market in the second quarter, up from 57% before.
“In addition, material costs are expected to increase by nearly 10% in the next 12 months,” it said.
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Tim Moore, head of economics at IHS Markit, said: “July data marks the first real slowdown in the recovery of the construction industry since the lockdown at the beginning of this year.”
He added: “The loss of momentum covers all major construction engineering categories, and is most pronounced in the housing construction sector.”
Martin Beck, senior economic consultant at EY Item Club, said: “The decline in the construction index was accompanied by a decline in the service industry and manufacturing index in the same month. However, the loss of momentum in the construction industry seems to be more of a supply-side constraint, and lack of transportation availability and ports. Congestion is related to trade friction, not weak demand.”
