UK construction firms start to see the wood for the trees as shortages ease

UK construction firms are finally starting to see the wood for the trees as supply constraints and roaring inflation cool, according to a closely watched survey published today.

Output in the British construction industry rose at its fastest pace in four months, according to IHS Markit and the Chartered Institute of Procurement and Supply’s (CIPS) latest purchasing managers’ index (PMI).

November’s PMI jumped to 55.5, up from 54.6 in October, marking the tenth consecutive month the construction industry has registered at least 50 on the index.

A reading above 50 indicates a majority of firms reported growing output.

Construction firms have been spiked by prices for raw materials soaring due to a combination of red hot demand for resources and supply chains breaking down.

A paucity of workers has also swelled construction firms’ costs due to them having to hike pay to attract staff.

However, the latest edition of the PMI indicates the worst of the cost crunch appears to be over.

Operating costs rose at the slowest pace for seven months, IHS Markit said.

The end of the furlough scheme has expanded the pool of available workers, meaning construction firms have a greater volume of candidates to select from, easing upward pressure on pay in the process.

“Recruiting is less of a headache for construction firms now that the furlough scheme has ended,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.