Construction activity slows as costs continue to rise

The latest HIS Markit/CIPS Purchasing Managers’ Index shows that during August, construction activity slowed due to a materials shortage that therefore affected the amount of work completed. 

In the index, it stated that in August there was a score of 55.2, down from 58.7 in July and a fall of more than 11 points from June where the figure recorded was 66.3. Even though a reading above 50 indicates an increase in work levels, Augusts score was the lowest since February.

Due to brexit and the pandemic construction work had been delayed. This work had recently been picked back up over the past month, however, confidence has dropped within clients according to survey respondents on account of limited material availability and inflation volatility. 

During the month of August, hiring slowed to its lowest level in four months as firms struggled to meet rising labour costs; overall cost of inflation increased and hit it’s second-highest level on record behind the rate seen in June. Civil engineering scored 54.8 following the slowest growth for the fourth month in a row. Commercial construction was the highest performing category with a score of 56 and Housebuilding recorded a rating of 55. 

Beard Construction finance director Fraser Johns said the current decline has made good supply chain relationships even more important. “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,” he said.

“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.”