UK building material costs soar on strong construction orders

Widespread shortages and wait times due partly to impact of Brexit and the Covid pandemic

A record surge in the cost of timber, bricks and steel sent construction industry costs soaring in May as new orders across the sector grew at the fastest pace in 24 years.

Severe shortages of essential building materials lay behind the increase in prices as the combined impact of Brexit and the pandemic caused supplies, many of them imported, to be held up on their way to the UK.

The majority of respondents to a survey by IHS Markit and the Chartered Institute of Purchasing Supply (CIPS) said they were paying significantly more for raw materials, pushing the industry inflation purchasing managers’ index (PMI) from an average of about 55 last year to more than 90 in May. The figure 50 separates growth from contraction.

Much of the increase in activity followed a return towards previously high, pre-pandemic levels of housebuilding, said IHS Markit. The growth in commercial construction, covering warehouses, office blocks and factory building, followed close behind.

At 64.2, up from 61.6 in April, the PMI covering all parts of the construction industry showed a faster rate of expansion than City analysts had expected.

The increase was the fourth consecutive month of construction sector growth and “signalled the strongest rate of output growth for just under seven years”, said IHS Markit.

Civil engineering activity also expanded sharply, but the rate of growth eased slightly from the previous month.

Tim Moore, the economics director at IHS Markit, said the rate of construction job creation was the fastest since July 2014 and the use of sub-contractors grew at a survey-record pace.


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“UK construction companies reported another month of rapid output growth amid a surge in residential work and the fastest rise in commercial building since August 2007,” Moore said.

“Total new orders increased at the strongest rate since the survey began more than two decades ago, but supply chains once again struggled to keep pace with the rebound in demand.

“There were widespread reports citing shortages of construction materials and wait times from suppliers lengthened considerably in comparison to those seen during April. Imbalanced supply and demand led to survey-record increases in both purchasing prices and rates charged by sub-contractors.”

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Phillip Inman

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