Housebuilding growth regained momentum last month as supply chain squeeze starts to ease

Growth in housebuilding activity recovered momentum in October according to a survey of purchasing managers, after slipping back sharply in September due to difficulties sourcing materials and labour.

The latest monthly figures from the Chartered Institute of Purchasing and Supply’s construction Purchasing Managers’ Index, show that housing activity rose to 55.4 on the index, from 52.8 in September, making it the fastest-growing sector in construction.

The index is set up so that any figure above 50 indicates growth in the sector, with figures under 50 indicating decline. The housebuilding figure is the strongest for three months.

Construction overall also recovered in October with hopes being raised that the worst of the supply chain issues that continue to dog the industry may nonetheless have peaked.

The survery said total activity for October stood at 54.6, up from the score of 52.6 the month before. The latest figure means output has grown in each of the last nine months with the figure in June reaching 66.3.

More than half of those questioned reported longer than normal delivery times, but the 54% who said so was down from the 63% who were saying the same thing in September, with the figure significantly below the 77% peak recorded in June.

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Tim Moore, director at IHS Markit, which puts together the survey, said: “There were widespread reports that shortages of materials and staff had disrupted work on site, while rising fuel and energy prices added to pressure on costs. Nonetheless, the worst phase of the supply crunch may have passed.”

And Jan Crosby, head of infrastructure, building and construction at KPMG, added: “The construction sector has had every challenge thrown at it this year and yet in the face of this ongoing volatility there is still huge demand for projects.

“I’d expect to see continued growth in demand for energy efficient buildings to drive energy retrofitting and services, as well as new build growth where existing buildings are no longer seen as green.”

The survey said that 73% had reported that costs were going up with rising energy and commodity prices along with raw material shortages and a lack of transport availability all being blamed.

The data came as the latest quarterly construction figures from the RICS highlighted continuing concerns over materials shortages and the availability of labour. The RICS said their survey showed 89% of respondents indicated that availability of materials was a problem for them, up from just 14% in the first three months of the year.

Labour shortages were also cited by 80% of respondents, with the problem most acute in sourcing bricklayers. The survey showed 69% are experiencing difficulty obtaining bricklayers, with shortages of carpenters, plasterers, electricians and plumbers also cited.