Rising order books hit by materials shortages

The recovery of construction activity across the UK slowed to a five-month low in October.

While output increased during the month, the rate of expansion was the weakest since June, according to the latest IHS Markit/CIPS construction PMI.

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Commercial activity rose again last month

Its total activity index fell to 53.1, from 56.8 in September. The index has registered above the 50.0 no-change mark in each month since June.

Explaining the slowdown, Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Activity growth in the construction sector dipped a little in October as supply chain challenges impacted on productivity and some of the momentum from the last few months leaked away.

“Higher levels of purchasing to meet the demands of the biggest rise in new orders since December 2015 were met with roadblocks of material shortages and the highest cost inflation since April 2019. Supplier delivery times acted as a drag on completion as builders rushed to finish work in hand and meet new build requests.”

Housebuilding was the best performing area of construction activity in October thanks to pent-up demand, posting an index score of 62.4, although the speed of recovery did ease slightly from September.

There was also another rise in commercial activity, with the index sitting at 52.1, although the latest expansion was the weakest for five months.

But civil engineering activity dropped for the third month running, with the index falling to 36.4. The rate of decline was the steepest since May.

New orders rose for the fourth time in as many months, with those responding to the survey continuing to mention a release of pent-up demand. The latest increase was the strongest since just before the UK escalation of the covid-19 pandemic at the end of March.

Mark Robinson, chief executive at Scape Group, said this was significant as England enters a second lockdown, because the sector remained one of the best-placed sectors to drive economic recovery.

He said: “The ramping up of restrictions and the [current] political turmoil in America is likely to further dent interest in private infrastructure investment. As such, public sector projects must continue to be at the forefront of government thinking.”

There was also a further decline in staffing numbers across the construction sector, though the rate of job losses was much slower than in the second quarter of the year.