Construction input cost inflation hits six-month high

Will Green is news editor of Supply Management
2 May 2019

UK construction input costs rose in April at the fastest pace in six months, according to the latest PMI.

Supplier performance deteriorated sharply, despite subdued demand for materials, with vendor lead times lengthening to the greatest extent since February 2015. Firms commented widely on low stocks and capacity constraints among vendors.

Input price inflation accelerated for the third month running and was the fastest since November 2018.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose to 50.5 in April, up on 49.7 in March and against the no-change reading of 50.

Duncan Brock, group director at CIPS, said: “With the fastest rise in input costs since November 2018, material shortages, and stagnating workloads, the sector is slowly coming to terms with this new landscape of Brexit stalemate and its impacts with business optimism going through its worst phase since 2013.”

Housebuilding was the strongest performing area, while commercial work was the weakest. Civil engineering activity decreased marginally.

Brock said: “The strongest rise in residential building since December 2018 was the only saviour of a sector otherwise heading for contraction again this month as deferred client decisions continued to impact on larger commercial and infrastructure projects, throwing the industry off balance.”

Tim Moore, associate director at IHS Markit, said: “The forward-looking survey indicators remain subdued, with the UK construction sector recording a drop in business optimism during April and the largest fall in new work for over one year.

“A lack of new work has started to impact on staff recruitment, as signaled by a reduction in payroll numbers for the first time since July 2016. This provides another signal that construction firms are bracing for an extended period of soft demand ahead.”

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