In December the UK’s construction sector grew at its fastest pace for almost six and a half years, but the supply chain is struggling to keep up.
The Markit/CIPS purchasing managers’ index (PMI) for the sector rose to 64.6 in January. This was up from 62.1 in December and well above the 50 level that marks expansion.
“January’s survey provides reassurance that the UK construction recovery remains on track,” said Tim Moore, Senior Economist with Markit. Indeed, Markit says residential house building in January had expanded at its fastest rate since November 2003.
KPMG also forecasts a buoyant year, but in a cautionary note says power will be with the supply chain due to rapid pick up in demand and shortage of capacity.
In a market forecast for the New Year, Richard Threlfall, KPMG’s Head of Infrastructure, Building and Construction, said higher GDP projections of 1.4% for 2013 and 2.4% for this year were indicative of the pace at which the recovery was accelerating and that the promise of a sustained uplift in the economy would drive growth across construction.
He said: “The construction industry usually overreacts like no other to the promise of better times. That reaction can already be seen in our housing market where demand is far outstripping the ability of house builders to deliver but it will be seen soon across other industry segments as well.”
However: “We predict the first half of the year will be tough, not because demand will be slow but because it will pick up too quickly for an industry which has lost 20% of its capacity over the last five years and where consequently the supply chain is weak. At the moment we are observing shortages of bricks, blocks, timber, aggregates and also of skilled labour across the sector.
“More capacity in the supply chain will be opening up every day, but it will be the second half of the year at the earliest before supply catches up with demand. Until then the power will remain with the supply chain.”
Until then it’s a case of tighten up those margin belts – yet again.
In this month’s issue of the magazine we Fast Track Nigel Buckie, Principle Architect of object architecture, a smaller sized practice specialising in residential architecture, and Head Hunters introduces some of the newest industry appointments.
Get your diary and your passport ready for our digest of construction events happening around the world this month and check out our round-up of some of the most exciting new products from Europe’s construction equipment firms.
All this, along with profiles on some of the industry’s best performing firms plus the usual round-up of UK & Ireland and world news.
Happy reading,
Heather Campbell
Editor
