Brexit: Construction hit by ‘unavailable transport, severe lack of materials and staff shortages’

UK construction companies have been hit by “disruptions on site from unavailable transport, a severe lack of materials and continued staff shortages”, and growth in the sector has slowed sharply further to its weakest pace in eight months, a key survey reveals.

Construction firms last month encountered the steepest rise in sub-contractor charges since the monthly survey – published yesterday by the Chartered Institute of Procurement & Supply and IHS Markit – began in April 1997.

CIPS and IHS Markit said: “Some firms noted that the unpredictable pricing environment had slowed clients’ decision-making on new orders and led to delays with contract awards.”

Labour shortages have been hitting many sectors of the economy, with industry bodies and companies having flagged the part played by Brexit. The Road Haulage Association has estimated there is a shortage of about 100,000 heavy goods vehicle drivers in the UK. The driver shortage has hit supply chains generally.

The latest UK construction activity index from CIPS and IHS Markit dropped sharply from 55.2 in August to 52.6 last month on a seasonally adjusted basis to signal a further sharp slowing of the sector’s growth. Although still significantly above the 50 no-change mark, the index is far adrift of the 24-year high of 66.3 recorded in June.

All three sub-sectors covered by the survey – housebuilding, civil engineering, and commercial property construction – experienced a slowdown in growth last month. Commercial property construction, with an activity index of 53.6, achieved the strongest expansion of the three sub-sectors in September.

Growth in the UK construction sector’s new orders slowed last month to its weakest pace since January, when the country was in lockdown.

Tim Moore, director at IHS Markit, said: “September data highlighted a severe loss of momentum for the construction sector as labour shortages and the supply chain crisis combined to disrupt activity on site.

“The volatile price and supply environment has started to hinder new business intakes as construction companies revised cost projections and some clients delayed decisions on contract awards. As a result, the latest survey data pointed to the worst month for order books since January’s lockdown.”

Construction firms remain upbeat about the business outlook, with 51 per cent forecasting rising output and only 8% anticipating a decline.

However, CIPS and IHS Markit noted “the degree of confidence was weaker than August amid some concerns that the supply-chain crisis will hinder growth”.

CIPS director Duncan Brock said:”Construction activity suffered another setback in September, as builders were hammered by staff and material shortages, delivery delays and higher business costs as this phase of the post-pandemic recovery became the shakiest for eight months.”