Construction sector buyers 'busier than ever'

Will Green is news editor of Supply Management
2 August 2018

The UK construction sector grew at the fastest pace since May 2017 during July.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index climbed to 55.8 in July, up on 53.1 in June and against the no-change reading of 50.

Growth was underpinned by the fastest increase in residential work in more than two-and-a-half years, with commercial work picking up and civil engineering increasing only moderately. Respondents commented on improving demand conditions and higher volumes of new project starts.

Despite an upturn in tender opportunities, construction companies are cautious about the business outlook over the next 12 months with the degree of positive sentiment unchanged since June and weaker than the long-term average.

Input cost inflation eased to a three-month low in July but remained strong in comparison to the post-downturn trend. Respondents reported rising fuel bills and higher prices for steel-related inputs.

Duncan Brock, group director at CIPS, said: “Purchasing managers were busier than ever this month with a welcome surge in new orders and the fastest rise in construction work since May 2017.

“The fly in the ointment was longer lead times across the construction supply chain. Rising demand meant that supply chains creaked under the strain and delivery times lengthened to the greatest extent seen in 12 months.

“Material shortages, limited inventories and capacity pressures bore down, as constructors caught up on previous weather delays and stocked up for new orders.”

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