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‘Sharp increase’ in construction activity

8 December 2021

‘Sharp increase’ in construction activity

In the last monthly Purchasing Managers’ Index (PMI) survey to be published in 2021 by IHS Markit for the Chartered Institute of Procurement & Supply (CIPS), construction companies indicated a sharp increase in business activity during November.

There were some signs that the worst phase of supplier delays may have passed, with the proportion of survey respondents citing longer delivery times falling to 47% in November, compared with a peak of 77% in June. 

Rapid input price inflation persisted and haulage driver shortages added to cost pressures, but the latest overall rise in operating expenses was the least marked for seven months.

At 55.5 in November, up from 54.6 in October, the headline seasonally adjusted Total Activity Index signalled ongoing expansion of overall construction activity. The index has now posted above the 50.0 no-change value for ten consecutive months. 

The November survey reported another robust rise in demand for construction products and materials. Higher levels of input buying reflected a combination of increased workloads and efforts to build inventories due to supplier delays. 

Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier performance, although firms noted an improvement in the availability of specific items, especially timber.

Around 72% of the survey panel reported an increase in purchase prices in November, while only 3% reported a decline.

Duncan Brock, group director at the CIPS, also said that “purchasing remained at higher level to counteract disruptions from ongoing driver shortages and port delays as supply chain managers bought more than their immediate need.” 

This suggests that the economic waters will remain choppy and unpredictable for some time to come. Indeed, some analysts believe that continuing high energy costs will lead to price rises in materials ranging from bricks to roofing materials. 

Nevertheless, the outlook remains positive and that is great news for hirers as 2021 comes to a close. 

Picture: JCB

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