According to the PMI (HIS Market/CIPS UK Construction Purchasing Managers’ Index), the construction industry across the UK has grown at its quickest pace over the last six months, with the demand for more developments going through the roof.
Data showed an increased growth of 56.3 in the first month of the year, up from 54.3 in December 2021, indicating a strong start to 2022.
The last year has seen significant growth month on month, with figures above 50.0 indicating an expansion of the construction industry.
The report posted that, due to continuing haulage and delivery issues, as well as shortages in construction staff, there have been significant delays in receiving goods from suppliers.
The report added: “However, the peak phase of supply chain difficulties appears to have passed as the latest downturn in vendor performance was the smallest since September 2020.”
When looking at the individual areas of the development industry, it was noted that the house building sector showed the slowest increase in growth in the previous four months with figures of 54.3, while civil engineering stood at a growth of 53.2, but the best performer at 57.6 was commercial development.
Tim Moore, IHS Market Director, said: “Residential work increased at one of the slowest rates since spring 2020, which is an early sign that cost of living concerns and rising interest rates could start to dampen the post-lockdown surge in spending.”
Brokerage XTB market analyst, added: “The UK construction sector continued to gain momentum after a difficult end to 2021 thanks to an improvement in commercial activity, which helped offset a weak rise in house building.
“Improvements were also helped by a drop in cost inflation, which fell to a 10-month low thanks to an easing of supply issues, which have been affecting the sector for months.
“As a result, commercial work helped construction growth reach a six-month high, but with supplier lead times continuing to lengthen in January as staff shortages and a lack of haulage availability hindered deliveries, the situation continues to be uncertain.”
On the 3rd of this month, the B.O.E.’s Monetary Policy Committee increased the base rate from 0.25 to 0.5 in an attempt to combat the increasing inflation rate. The current inflation rate is 5.4%, which is predominantly due to the massive price hikes in gas and electricity. Inflation currently exceeds the Bank of England’s target by a massive 2%. The inflation rate is expected to hit its peak at 7.25% in April, which is approximately 2% higher than was predicted back in November 2021.