UK construction growth slows despite improved supply chain

Growth in the UK construction industry slowed in December as the impact of Omicron offset gains for building firms from fading supply chain disruption.

Figures from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) showed building companies ending 2021 on a weaker footing, with coronavirus infections and fresh pandemic restrictions hitting demand.

According to the latest snapshot, construction firms reported delays to decision making by clients because of the Omicron variant, contributing to the weakest pace of growth in the sector for three months.

tuttavia, the survey of 150 construction companies, which is monitored by the government and the Bank of England for early warning signs from the economy, signalled a reduction in pressure on building firms from supply chain problems.

Offering respite to the sector after severe disruption earlier this year, the number of construction firms reporting supplier delays dropped from 47% in November to 34% in December. Fewer shortages of essential raw materials and improved delivery times contributed to the slowest rate of inflation for building supplies for nine months.

The development comes amid mounting concern over the impact from inflationary pressures across the British economy from severe supply chain disruption and high energy prices combining to drag on growth and hurt household finances.

Official figures show soaring costs for energy and petrol pushed inflation to 5.1% a novembre, the highest in a decade. The Bank of England has said the rate could peak at close to 6% this spring, with experts warning that energy bills rising by 50% will inflict severe pressure on households.

It comes as fresh figures showed inflation in the eurozone jumping to 5% in December, dal 4.9% a novembre, which was already the highest rate since the introduction of the single currency two decades ago. Energy prices drove the cost of living higher, rising by 26% over the last year amid soaring wholesale oil and gas prices.

Economists said the latest figures from the UK construction sector offered an encouraging early sign that supply shortages were beginning to ease, but warned that the emergence of Omicron threatened to derail recent progress in resolving bottlenecks.

Jan Crosby, the head of infrastructure, building and construction at the accountancy firm KPMG, disse: “Along with the disruptive weather we tend to get at this time of year, any tightening of restrictions or workers needing to self-isolate will likely result in project delays or even the temporary closure of some sites.

“The sector has shown great resilience through the events of the past two years, remaining robust despite having seemingly endless obstacles and pressures to contend with. And it will need to keep doing so as we enter 2022, with the impact of the ongoing Omicron variant, supply chain issues and skills shortages continuing to create uncertainty in the months ahead.”

According to the latest figures from IHS Markit and Cips, housebuilding experienced the strongest growth and was the only subsector to gain momentum in December. Activity was weaker for commercial building projects and civil engineering, despite reports that customer demand across the building industry remained resilient.

The IHS Markit/Cips UK construction purchasing managers’ index (PMI) fell to a three-month low of 54.3 in December from 55.5 a novembre. A reading above 50 signals growth.

Tim Moore, a director at IHS Markit, said the worst phase of supplier delivery delays that have plagued the sector in the past year “seems to have passed”, with improvements in the availability of construction products and materials in December.

"[tuttavia,] while suppliers to the construction sector have caught up on backlogged work and boosted capacity, there were still widespread reports citing unresolved transportation issues and driver shortages," Egli ha detto.

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