Rapid surge in building causes supply squeeze

UK BUILDERS are still reporting a powerful upswing in business conditions, coupled with emerging constraints on supply, according to a major survey of construction firms released yesterday.

Markit and the Chartered Institute of Purchasing and Supply (CIPS) released their purchasing managers’ index (PMI) for construction yesterday, with a score of 60 for May. A figure over 50 suggests expansion.

It is the seventh straight month in which the PMI for construction has been at or above 60, suggesting a rapid upturn for a sector which struggled after the crisis.

But the firms are also now reporting emerging issues because of the strong upturn. Sub-contractor availability dropped at the sharpest pace for nearly 17 years, and the rates charged by the freelance workers rose at the fastest pace since 1997. Suppliers are taking longer to reach firms with orders, given the burst of demand from firms.

“With supply constraints still persisting, there are some concerns about how this prolonged period of growth can be sustained over the course of 2014,” said CIPS chief executive officer David Noble.