Construction sector faces 'brick ceiling' as supply chain tightens

Will Green is news editor of Supply Management
2 May 2014

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2 May 2014 | Will Green

The UK construction sector faces the prospect of hitting a “brick ceiling” as the supply chain “tightens”, according to a survey of buyers.

The latest Markit/CIPS Construction Purchasing Managers’ Index showed "supply chain pressures persisted in April”, with the deterioration in vendor performance “one of the sharpest seen over the past 16 years”.

Respondents reported input cost inflation “eased slightly” to a three-month low in April, while higher prices were widely cited for raw materials such as bricks and timber.

The index showed in April growth slowed to 60.8, compared to 62.5 in the month before, against a baseline of 50 that indicates zero expansion. The rate of growth was the weakest since October 2013.

Tim Moore, senior economist at Markit, said: “Set against the tightening supply chain backdrop, a difficult challenge lies ahead for the housebuilding sector to make sure it doesn’t hit a brick ceiling.”

Residential housing was the best performing area and growth has now been recorded for 15 consecutive months, the longest period since 2006/7, while commercial activity “increased sharply” in April but “eased markedly” in civil engineering.

The survey showed a “steep and accelerated rise” in new business for construction companies and the current period of job creation has now extended to 11 months.

David Noble, group CEO at CIPS, said: “Reflecting the fast pace of growth filtering through the supply chain, vendor performance in April continued to deteriorate, typified by shortages of capacity, low stocks and worsening lead times. Beyond this, the easing of cost inflation this month was acknowledged to have brought some relief to the industry.”

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