Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

UK construction recovers as supply chain pressures ease

Published 12/06/2021, 04:39 AM
Updated 12/06/2021, 06:06 AM
© Reuters. Scaffolders work on a construction site in London, Britain, October 20, 2021. REUTERS/Toby Melville

LONDON (Reuters) -Growth in Britain's construction industry hit a four-month high in November, as supply-chain difficulties appeared to have passed their peak and a rise in commercial property work offset a slowdown in house-building, a survey showed on Monday.

The monthly purchasing managers' data also showed an easing in inflation pressures to their lowest since April - although they are still high in outright terms.

The survey largely predates the emergence of the Omicron variant of COVID-19, and the signs of an easing in inflation may encourage the Bank of England to wait rather than raise interest rates this month, as had been widely expected.

The IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) rose to 55.5 last month from 54.6 in October, and IHS Markit said the worst of supply chain shortages appeared to have passed for the sector.

Just under half of construction companies reported longer delivery times, compared with more than three quarters in June.

"Port delays and a severe lack of transport availability due to haulage driver shortages continued to hold back supplier performance, although firms noted an improvement in the availability of specific items, especially timber," IHS Markit said.

Some 72% of firms reported increased costs for building supplies - compared with just 3% who saw a fall - but this still represented the lowest inflation pressure since April.

The all-sector PMI - a combined reading of November's manufacturing, services and construction surveys - edged down to 57.4 from October's 57.5, which was the highest since July.

© Reuters. Scaffolders work on a construction site in London, Britain, October 20, 2021. REUTERS/Toby Melville

Construction order growth was the strongest in three months, but economists warned that 2022 might still prove tough. A moratorium on commercial property evictions is due to end - reducing the demand for new space - and a likely rise in interest rates and lower disposable income hurt housing demand.

"Despite the 8% increase in public sector gross investment in the upcoming 2022/23 fiscal year, which will boost the pipeline of civil engineering work, overall construction output looks set to rise slowly," said Samuel Tombs of Pantheon Macroeconomics.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.