Supply shortages hit Britain’s booming building industry

Strongest growth in sector for more than 20 years but firms facing longer lead times and higher prices for components

Last modified on Tue 6 Jul 2021 06.32 EDT

Britain’s booming construction sector is suffering from severe supply chain bottlenecks as it experiences the strongest growth in almost a quarter of a century, the latest snapshot of the industry has shown.

The monthly survey by IHS Markit/Cips reported a surge in housebuilding and a pick up in construction activity generally as the economy emerged from Covid-19 lockdown.

But the rise in the construction purchasing managers’ index to its highest level since June 1997 was accompanied by mounting price pressures and delays caused by a shortage of materials and finished goods.

The IHS/Markit CIPS report stood at 66.3 in June, up from 64.2 in May, the 11th consecutive month of expansion and well above the 50 cut-off point that denotes whether the sector is growing or contracting.

Rapid growth boosted employment in the construction sector – which accounts for about 6% of the economy – but 77% of firms reported longer lead times from suppliers, while prices for products and raw materials rose at their fastest rate since the survey was launched.

Tim Moore, the economics director at IHS Markit, said: “June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace.

“The headline index signalled the fastest rise in business activity across the construction sector for 24 years. Total new orders expanded 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 UK economy.

“Supply chains once again struggled to keep up with demand for construction products and materials, with lead times lengthening to the greatest extent since the survey began in April 1997. Survey respondents widely reported delays due to low stocks of building materials, shortages of transport capacity and long wait times for items sourced from abroad.”

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