Saturday, 8 September 2018

Construction sector lead times are worst for 3 years due to rising demand and stock/labour issues

Construction sector vendor lead times lengthened in August to the greatest degree in more than three years, according to the latest PMI.

Rising demand, low stock and labour shortages among suppliers impacted delivery times, meaning vendor performance deteriorated to its worst level since March 2015.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index slipped to 52.9 in August, down on 55.8 in July and against the no-change reading of 50.

Commercial building was the best performing sub sector, followed closely by residential work, while work on civil engineering projects decreased for the first time in five months.

Purchasing activity increased for the 11th consecutive month in August, though the latest upturn was the weakest since March. Despite stretched supply chains and rising energy-related costs, data indicated input price inflation edged down to its lowest since July 2016.

Duncan Brock, group director at CIPS, said: “If there is anything positive to note from this month, it would be that the rate of hiring remained strong. However, persistent pressures from skills shortages and slow rates of new orders will continue to hit business optimism still trailing below the survey’s average.

“The sector is hovering too close for comfort to the no change mark which makes it a contender for more disappointment next month. Though the path to Brexit is paved with good intentions, without significant progress the sector will soon be building castles in the air rather than on solid ground.”

Tim Moore, associate director at IHS Markit, said: “The degree of optimism reported in August remained constrained by external factors, including domestic political uncertainty, stretched supply chains and shortages of suitably skilled labour.”

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