Rising costs hit orders for UK construction firms

April’s PMI reached 58.2, down by 0.9 from the month before

06 May 2022

Rising costs and economic worries started to restrict growth in the UK’s construction sector last month, but businesses are still expanding, new data show.

An influential survey found that the increased prices that companies are paying for energy, fuel and raw materials led to cost inflation hitting its highest since last September.

The S&P Global/CIPS construction purchasing managers’ index (PMI) survey gives the sector a score each month. If the score is over 50 the sector is considered to be growing, while under 50 is considered contraction.

After two months at 59.1, the index posted a drop to 58.2 in April.

“The construction sector is moving towards a more subdued recovery phase as sharply rising energy and raw material costs hit client budgets,” said Tim Moore, economics director at S&P Global.

“House building saw the greatest loss of momentum in April, with the latest expansion in activity the weakest since September 2021.

“Commercial and civil engineering work were the most resilient segments, supported by Covid-19 recovery spending and major infrastructure projects respectively.”

The survey found that suppliers are struggling to keep up with demand for construction materials and other products.

Of those surveyed, around 45% reported that it was taking longer to get goods delivered, while only 2% said there had been an improvement.

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, said: “A slowdown in output growth amongst builders in the UK has highlighted a number of issues to be concerned about including rising costs, shortages and a hesitancy amongst customers.

“New order levels rose at the slowest pace since the end of last year. There were fears around disrupted supplies as 45% of supply chain managers reported longer lead times.

“To counteract some of these challenges and with an eye on the future, supply chain managers were building stocks resulting in another sharp rise in purchasing activity.”

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