Unsupported browser

For a better experience please update your browser to its latest version.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Concern over supply chain as growth increase continues

Construction industry subcontractor rates have increased at the steepest rate for more than 17 years, leading to concerns over the ability of the supply chain to cope with further growth.

According to the Markit/CIPS Construction Purchasing Managers’ Index for May, rates charged by construction subcontractors increased at the steepest pace since the survey began in 1997.

Respondents to the survey “widely noted shortages of stock and supply-chain bottlenecks”.

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: “Subcontractor capacity fell to the strongest rate since August 1997 and delivery times continued to lengthen, as suppliers struggle to make up the gap in output.

“Consequently, with supply constraints still persisting, there are some concerns about how this prolonged period of growth can be sustained over the course of 2014.”

Richard Threlfall, KPMG UK head of infrastructure, building and construction, said main contractors were now “taking a thrashing”, with the supply chain “holding the whip”.

The survey showed a thirteenth successive month of growth, but the data showed momentum had eased with the index falling from 60.8 to 60.0 (where 50.0 is equivalent to no change).

The latest PMI signalled the slowest pace of expansion since October 2013, primarily due to lower levels of commercial building which showed its weakest activity for seven months.

Housebuilding continued to be the strongest performing part of the industry, while civil engineering output increased at a faster rate.

The industry saw a rise in staffing levels for the twelfth successive month, meaning the industry has increased its staffing levels at the strongest rate since mid-2006 to early-2008.

The survey pointed to continued steep increase in demand for construction materials, with input buying rising at the fastest rate for three months.