UK Builders Hit with Largest Cost Inflation Surge Since 2022, PMI Data Shows
April 2024 UK Construction PMI: Key Findings and Industry Impact
LONDON, May 7 (Reuters) - British builders saw one of the biggest month-on-month jumps in cost inflation on record in April, according to a survey on Thursday that also showed the Iran war increased delivery delays and other supply chain difficulties.
Input Cost Inflation Reaches Record Highs
The S&P Global UK Construction Purchasing Managers' Index's measure of input cost inflation leapt to 81.4, its highest since June 2022. The jump from 70.5 in March was the second-biggest rise since 1997 when the data series began, only just shy of the 11-point jump from February to March.
Headline Construction Activity Weakens
The headline construction PMI, which measures overall activity, fell to 39.7 from 45.6, its weakest since November and below all economists' expectations in a Reuters poll.
Survey Respondents Report Widespread Cost Increases
S&P said around 69% of survey respondents reported a rise in their input costs in April, up from 48% in the month before.
"A rapid acceleration of input cost inflation was seen across the UK construction sector in April. Aside 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," said Tim Moore, economics director at S&P Global Market Intelligence.
Supply Chain Disruptions and Delivery Delays
The Bank of England is closely monitoring measures of input prices and prices charged by companies as it tries to gauge whether the inflation impact from the war will last long enough to require increases in borrowing costs.
Businesses reported the most widespread delays in shipping times since December 2022, S&P said, as vessels were largely unable to pass through the Strait of Hormuz.
Impact of Middle East Conflict on Orders and Employment
The conflict in the Middle East also hit new orders, which declined at the sharpest rate since last November.
The pace of job-shedding also accelerated in April, with the employment index at its lowest since December, as firms cited less work and higher payroll costs.
Companies' optimism about the coming 12 months dropped too.
Sector Performance and Broader Economic Context
The construction PMI showed civil engineering and residential house-building were the biggest drag on activity, while commercial building contracted less severely.
The wider all-sector PMI, which includes previously released services and manufacturing figures, rose to 51.5 from March's 49.9, reflecting stronger services performance.
Additional Industry Insights
A separate survey from the Royal Institution of Chartered Surveyors, published earlier on Thursday, showed construction activity in the three months to March was the weakest since the three months to June 2020, when the COVID-19 pandemic partially closed building sites.
(Reporting by Suban Abdulla; Editing by Joe Bavier)
