Building breaks records

7 July 2021

Once again, monthly data on construction output confirms the reports from many hirers on the blog about increasing business levels and supply chain challenges. 

Statistics from construction companies responding to the Purchasing Managers’ Index (PMI) survey for June, compiled by IHS Markit for the Chartered Institute of Procurement & Supply (CIPS), showed that overall activity expanded at the fastest pace since June 1997.

Suppliers' delivery times for key building materials lengthened to the greatest extent since the survey began just over 24 years ago, surpassing the previous record seen in April 2020. 

And severe shortages of products and materials resulted in a survey record rise in purchasing prices in June.

Construction work in the house building sub-category (index at 68.2, with 50.0 representing no change level) increased at the fastest pace since November 2003.

Around 77% of the survey panel reported longer lead times among suppliers in June. The seasonally adjusted index pointed to the worse month for supplier delays since the survey began just over 24 years ago. 

Construction companies overwhelmingly cited stock shortages among vendors, reflecting severe delays with shipping and haulage, especially for products sourced from the EU. 

In terms of building materials, panel members commented on short supply generally, particularly cement, concrete, plaster, steel, timber and roof tiles. And average prices paid for products and materials increased at survey-record pace.

Construction companies remain optimistic about growth prospects for the next 12 months. Significantly, perhaps, the degree of confidence eased to its lowest since January, in part reflecting concerns about labour availability and the sustainability of the recent surge in demand.