'Worst phase of supply crunch may have passed'

Will Green is news editor of Supply Management
4 November 2021

The number of UK construction companies reporting supplier delays fell in October, suggesting the “worst phase of the supply crunch may have passed”, according to the latest PMI.

Just over half (54%) of firms reported longer supplier delivery times, down on 63% in September and June’s peak of 77%.

Tim Moore, director at IHS Markit, said: “There were widespread reports that shortages of materials and staff had disrupted work on site, while rising fuel and energy prices added to pressure on costs.

“Nonetheless, the worst phase of the supply crunch may have passed, as the number of construction firms citing supplier delays fell to 54% in October, down from 63% in September. Similarly, reports of rising purchasing costs continued to recede from the record highs seen this summer.”

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index rose to 54.6 in October, up on 52.6 in September and against the no-change reading of 50.

Companies reported strong customer demand but some suggested supply shortages and escalating costs had hindered contract negotiations.

Around three quarters (73%) of respondents reported an increase in purchase prices, attributed to rising energy and commodity prices, raw material shortages and a lack of transport availability.

Duncan Brock, group director at CIPS, said: “Activity in the construction sector powered ahead in October with the fastest rise in purchasing for three months as builders continued their summer bounce into the autumn and resorted to forward buying and building stock levels.

“With rising optimism and employment levels builders seem confident that the next 12 months will be rosier. However, with the squeeze on supply and staff shortages, it's far from guaranteed that uncertainty and instability are behind us just yet.”

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