Construction activity fell to 55.2 this August, down from 58.7 and below the market expectation of 56.9, the latest purchase managers’ index shows.

The report states this is the “softest” pace of expansion since February and mentions both the restricted supply of materials and transport as the main factors for this weakness.

In fact, input cost inflation is currently running at the second-fasted rate of inflation in all the 24 years the survey has been running.

Total new work rose the least since March and job creation ran at a four-month low, pointing to a lack of skilled workers becoming a bigger issue, too.

The report adds that commercial work was the best performing category, with housebuilding coming second.

Naismiths director Gareth Belsham says: “The construction industry is fast becoming a victim of its own success. The supply chain problems are no longer just project speed bumps; they’re applying the brakes to new orders as well.

“With steel, timber and fuel costs all mushrooming, contractors are seeing their margins eaten away. The pipeline of new work is still healthy by historical standards, but orders are now coming in at the slowest rate since March.

“But despite a growing sense that the post-lockdown boom may have peaked, the mood in the industry remains overwhelmingly upbeat. More than half of the builders surveyed for the PMI predict a further increase in activity over the coming year.

“Cool heads in the industry have seen this all before, and experienced developers and builders are recalibrating prices and schedules and getting on with it.

“But there is still the nagging question about the painfully high levels of material cost inflation; is it a blip, or will it start to impact not just the delivery of projects, but demand as well?”

And Beard finance director Fraser Johns adds: “Today’s stats really underline the concerns expressed at the start of the year that the supply chain issues would undermine the post-pandemic recovery in construction.

“With the slowest level of growth in five months and now client confidence dampening as a result of the uncertainty over supplies, it feels a long way from the wave of optimism felt at the end of 2020 and into Q1 this year.

“It puts real emphasis once again on relations with supply chains – ensuring prompt payment for example – and requires a proactive approach in terms of multi-stage procurement and working more closely with customers to keep them well informed about the situation.

“We don’t look to be turning a corner any time soon on the supply crisis, so it’s key for the industry to pull together and collaborate right through the supply chain to try to lessen the impact of these issues.”