Many companies report supply shortages
Demand for new homes and commercial real estate continues to soar, with the construction sector posting its highest growth rate in 24 years in June.
This is according to the latest PMI data, which closely tracks the construction industry.
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The IHS Markit/CIPS construction industry PMI for June was better than expected, rising to 66.3 from 64.2 the previous month.
Above 50 indicates an increase in activity and is the highest recorded since 1997.
Survey respondents noted a rapid improvement in demand for new construction work, particularly residential building and commercial projects linked to the reopening of the UK economy.
Many businesses are finding it difficult to keep up with rising demand levels. Raw material shortages and supply chain bottlenecks are driving up costs and adding to inflation concerns.
Tim Moore, economics director at IHS Markit, who compiled the survey, further commented on the findings:
“June statistics showed that UK construction production rose rapidly again, with residential, commercial and civil engineering activity all expanding at a fast pace. showed the fastest rise in business activity in 24 years. Total new orders mainly reflected strong demand for residential projects and a boost to commercial business as the UK economy reopened. It expanded at the strongest pace since then,” Moore said.
“Supply chains are once again struggling to keep up with demand for construction products and materials, and lead times have increased significantly since we began our survey in April 1997. There were widespread reports of delays due to lack of capacity. Waiting times are long for goods coming from overseas.”
“Purchase prices and subcontractor rates both rose at a record pace in June, driven by supply shortages across the construction industry. Rising cost pressures and concerns about labor availability are driving some construction This appears to be constraining optimism about the company’s management.The level of positive sentiment regarding next year’s growth prospects remains high, but has fallen to its lowest level since early 2021.
