By Ian McConnell

THE UK construction sector’s recovery accelerated further in June, with growth in activity the fastest for 24 years, but severe shortages of products and materials saw a survey-record rise in purchasing prices, a key survey shows.

“Severe delays with shipping and haulage”, especially for products sourced from the European Union, are flagged by the survey.

The activity index for the construction sector from the Chartered Institute of Procurement & Supply and IHS Markit climbed from 64.2 in May to 66.3 in June on a seasonally adjusted basis, moving even further above the level of 50 deemed to separate expansion from contraction to its highest since June 1997.

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Activity in the housebuilding sub-sector rose at its fastest pace since November 2003. Housebuilding recorded the strongest growth of the three sub-sectors covered by the survey. The next-strongest expansion came from commercial property activity, which recorded its sharpest growth since March 1998.

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Civil engineering activity continued to grow sharply, although its rate of expansion eased in June to its weakest in three months.

CIPS noted construction companies had “indicated another month of sharply rising employment numbers, reflecting efforts to boost capacity and meet incoming new orders”. While the pace of job-creation moderated from that in May, it remained among the fastest seen over the past seven years.

Sub-contractor usage increased at the steepest pace since the survey began in April 1997.

CIPS noted June was the worst month for supplier delays since the survey began more than 24 years ago, based on the seasonally adjusted index measuring this aspect.

Around 77% of the survey panel reported longer lead times among suppliers in June.

CIPS said: “Construction companies overwhelmingly cited stock shortages among vendors, reflecting severe delays with shipping and haulage, especially for products sourced from the EU. In terms of building materials, panel members commented on short supply across the board, particularly cement, concrete, plaster, steel, timber and roof tiles. Imbalanced demand and supply resulted in rapid cost inflation across the construction sector in June. Average prices paid for products and materials increased at [a] survey-record pace. Adding to cost pressures in June was the steepest rise in rates charged by sub-contractors since the survey began.”

The survey showed UK construction companies remain confident about the prospects for a rise in activity on a 12-month horizon. However, CIPS noted the “degree of confidence eased to its lowest since January, in part reflecting concerns about labour availability and the sustainability of the recent surge in demand”.

CIPS director Duncan Brock said: “A wave of new orders overwhelmed supply chains again this month.

“The meagre availability of raw materials placed obstacles in the path of stronger workflows where supplier delivery times extended into record-breaking territory once again and surpassed the height of disruption when the pandemic first hit.”

He added: “A lack of delivery drivers and logistics difficulties for EU imports left stock undelivered or unavailable and construction companies waited while costs mounted. Construction’s heavy load remains inflation, rising to its highest rate since April 1997 as a staggering 86% of respondents reported paying more for their goods in June.”