Construction companies in the UK are experiencing some of the sharpest cost rises in nearly 30 years as the war in Iran drives up prices for fuel and raw materials, according to a closely watched survey.<\/p>\n
The poll of UK construction companies found that input cost inflation \u2013 which accounts for expenses such as raw materials, energy and labour \u2013 rose last month to the highest level since June 2022 when there was a spike in commodity prices caused by Russia\u2019s invasion of Ukraine.<\/p>\n
April\u2019s jump in purchasing prices was also one of the steepest since the survey began in 1997.<\/p>\n
The monthly purchasing managers\u2019 index (PMI) for construction activity, considered one of the best indicators of growth in the sector, fell to 39.7 in April, the lowest level since last November and down from 45.6 in March.<\/p>\n
Readings above 50 represent growth and anything below a contraction. The index had not shown growth since January last year.<\/p>\n
Construction is one of the largest sectors of the UK economy, making up about 7% of GDP and employing more than two million people. A key promise of the Labour government had been to \u201cget Britain building again\u201d with a focus on boosting infrastructure <\/a>projects and building 1.5m more homes by 2030<\/a>.<\/p>\n However, the sector has been struggling with subdued demand, an ageing workforce and higher costs over the past two years. The conflict in the Middle East is further weighing on the industry by causing increased business uncertainty and higher costs.<\/p>\n Tim Moore, the economics director at S&P Global Market Intelligence, which compiles the PMI survey, said: \u201cA rapid acceleration of input cost inflation was seen across the UK construction sector in April.<\/p>\n \u201cAside from the post-pandemic surge in input prices from early 2021 to mid-2022, the latest rise in purchasing costs was the steepest in three decades of data collection.\u201d<\/p>\n Moore added that about two-thirds of companies surveyed reported \u201chigher cost burdens\u201d in April and said this was \u201coverwhelmingly\u201d linked to their suppliers passing on higher fuel costs as a result of the war and strait of Hormuz shipping blockade, and subsequent rises in prices for raw materials.<\/p>\n Delivery times from vendors also rose at the sharpest pace since December 2022 due to international shipping delays and difficulties importing materials from the Gulf region.<\/p>\n Construction companies said new work was not coming in to replace completed projects and sales conversion times were taking longer. The lack of new projects had led a number of companies to not replace staff who voluntarily left, the PMI survey said.<\/p>\n This month UK housebuilders Crest Nicholson<\/a> and Berkeley<\/a> both issued profit warnings, citing the Iran war for increasing costs and reducing demand.<\/p>\n Travis Perkins, the UK\u2019s largest builders\u2019 merchant, said last week that trading in the first quarter of the year had been \u201cchallenging\u201d, with revenue down 1.7%, \u201cas construction activity levels remain subdued\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Construction companies in the UK are experiencing some of the sharpest cost rises in nearly 30 years as…\n","protected":false},"author":2,"featured_media":416393,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-416392","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/416392","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=416392"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/416392\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/416393"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=416392"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=416392"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=416392"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}