UK construction companies continued to report widespread supply constraints and rapidly increasing purchase prices but the latest report from IHS Markit, CIPS forecasts that “the worst phase of the supply crunch may have passed.”
Reports of issues continue but indications are that the trends are the least severe since April.
Tim Moore, Director at IHS Markit, which compiles the survey said: “The volatile price and supply environment added to business uncertainty and continued to impede contract negotiations. As a result, the overall rate of new order growth was unchanged from the eight-month low seen in September.
“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.”
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, 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.
“New order growth remained constant but increasing lead times from suppliers made commitment to contracted projects difficult because of the unpredictability of materials arriving on time as reported by over half of all supply chain managers. A slight moderation in input price inflation also gave hope to builders that price rises were receding, which could mean fewer delayed projects as costs were reviewed.
“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, its far from guaranteed that uncertainty and instability are behind us just yet.”
