Shortages fuel record input price inflation

1 June 2004
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02 June 2004 | Gareth Mytton

The sharp rise in oil and steel prices hit UK building companies hard in May, according to the latest purchasing managers' index (PMI).

Input price inflation was the highest in the survey's history. The index, in which 50 indicates no change on the previous month, rocketed to 75.7, its highest level since the survey began in April 1997. Exactly 58 per cent of companies said their input costs had risen over the past month.

The headline PMI - a composite indicator of economic conditions compiled by CIPS and NTC Research - fell slightly again, to 56.3, more than 61 per cent of companies expected activity to have risen in a year's time.

Companies bought more materials and services to satisfy new and existing projects, although shortages and supply bottlenecks helped to lengthen suppliers' delivery times.

Delays between completing current contracts and starting work on new ones caused a decline in civil engineering activity (49.5), but activity grew for housing companies (up to 59.1) and commercial builders (down by 1.2 to 56.5).

The use of subcontractors grew at the same rate as in April (54.5), while their rates increased (55.1). Ten categories of subcontractors were in short supply, including bricklayers, joiners and window installers.

SMjun2004

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