Construction growth eased to its slowest pace in eight months, hit by weaker demand as well as a combination of staff, material and transport shortages, according to the latest data from IHS Markit/CIPS.
The Construction Purchasing Managers’ Index PMI slipped to 52.6 in September, from 55.2 the previous month. A rate above 50.0 signals growth.
It adds that growth in the sector fell further below the two-year high posted in June of 66.3.
The survey says: “A rapid drop in sub-contractor availability was reported in September. Imbalanced demand and supply contributed to the steepest rise in sub-contractor charges since the survey began in April 1997.”
All three categories of construction – housebuilding, civil engineering and commercial – suffered “a loss of momentum in September”, says the report.
Civil engineering was the hardest hit, while housebuilding saw expansion at its “weakest since the recovery began in June 2020”.
The report says a lack of sub-contractors squeezed labour supply across the industry last month.
It adds that purchase prices “increased rapidly in September”, mainly due to supply shortages and transport surcharges, although the rate of inflation eased further from June’s all-time peak.
Chartered Institute of Procurement & Supply group director Duncan Brock says: “Construction activity suffered another setback in September, as builders were hammered by staff and material shortages, delivery delays and higher business costs as this phase of the post-pandemic recovery became the shakiest for eight months.”
Naismiths director Gareth Belsham adds: “The perfect storm that had been brewing for several months has finally broken over the construction industry
“On the construction front line, things are far more serious than the ‘stresses and strains’ the Prime Minister [Boris Johnson] says are a normal side effect of rapid growth.
“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 things are getting steadily tougher and while there’s still plenty of optimism in the industry, the summer’s easy boom times are firmly in the rear-view mirror.”
Beard finance director Fraser Johns says: “Today’s stats show the construction sector is still being significantly hampered by labour shortages and supply chain issues.
“With output volumes rising by the smallest extent for eight months, and a rapid drop in sub-contractor availability, strong relations with suppliers have never been more critical.
“To build these relationships and to reassure clients, contractors need to ensure prompt payment and regular collaboration with suppliers is fundamental to all projects.
“Inflationary price pressures and supply shortages continue to hinder new business, with clients re-considering decisions in the current environment.
“This may continue until such pressures begin to ease, a time period which is still unclear.”
