Transport and freight shortages are beginning to bite, putting further pressure on already stretched materials supply problems, according to the latest IHS Markit report.
This resulted in input cost inflation accelerating to the second fastest rate for nearly a quarter century since the survey began, surpassed only the record growth two months previously.
Concerns over costs, availability and lead times dampened any optimism driven by the growing volume of new work supported by continuing resumption of orders previously postponed by Brexit and the pandemic.
IHS Markit economist Usamah Bhatti said: “Supply chain disruption continued to disrupt activity across the UK construction sector, as demand for materials and logistics capacity outstripped supply. Average vendor performance continued to deteriorate at a near-survey record rate, as firms noted severe shortages of building materials, a lack of available transport capacity and long wait times for items from abroad due to port congestion.
“As a result, the rate of input cost inflation faced by construction companies accelerated to the second-fastest on record, while the increase in subcontractor rates hit a fresh series high, fuelled by supply shortfalls in the sector. Despite this, businesses noted a stronger degree of optimism regarding the year-ahead outlook, as more than half of survey respondents predicted a rise in activity. This was underpinned by expectations that new contracts would be brought to tender across the construction sector as markets continued to recover from the economic disruption caused by the pandemic.”
