One of Britain’s biggest builders’ merchants has warned of shortages of materials as the UK construction industry struggles under mounting pressure from the deepest supply chain crisis in decades.
Jewson has told customers that prices for a range of goods – including timber, wheelbarrows, insulation and adhesives – will rise by as much as a fifth this month amid growing evidence from across the construction sector of severe and sustained disruption linked to Covid and Brexit.
It said supplies of cement, plasterboard and insulation were being rationed by manufacturers, forcing it to limit the availability of some products, while other products would go up in price or take longer to deliver to customers.
In a further sign of the fallout in the UK from the coronavirus and exiting the EU, the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a decline in growth across housebuilding, commercial work and civil engineering for the construction industry last month, as the restricted supply of materials and transport issues weighed on activity.
The monthly purchasing managers’ index fell to 55.2 in August, down from 58.7 in July on an index where anything above 50 separates growth from contraction. City economists had forecast a reading of 56.9.
Brian Berry, the chief executive of the Federation of Master Builders, said: “Builders throughout the UK, particularly smaller firms, are struggling to recover from the pandemic as a result of the continued materials crisis.”
Reflecting intense disruption across the industry, Jewson said that some building materials producers were using an “allocation process” to limit the supply of in-demand products. This would in turn affect its wholesale customers.
It said Hanson was allocating cement to ensure “fair supply in the market”, which had led Jewson to limit certain products to five an order. British Gypsum had introduced an allocation process for plasterboard, while the insulation firm Recticel had undertaken similar steps.
Jewson said soaring demand for certain products and supply shortages had forced it to put up some of its prices this month, such as a 10-15% increase for wheelbarrows, a 5-20% rise for sealants, adhesives and chemicals, a 12% increase for glass wool insulation and a 20% jump for MDF mouldings.
It also told customers to expect longer delivery times for kitchen appliances with in-built microchips, such as combi and microwave ovens, amid shortages of chips worldwide.
“We are aware of the importance of getting you everything you need when you need it. However, sometimes our suppliers inform us of issues in the supply chain, which means that some products may not be as readily available as we would hope,” it told its customers.
It comes as construction industry leaders voice concerns of severe disruption across the sector. Travis Perkins last month warned of shortages of timber and plasterboard, while firms including Ikea, B&Q, Homebase and Argos have also warned of supply chain problems.
Business leaders have said chronic shortages of workers and key materials are beginning to weigh on Britain’s economic recovery from the winter lockdown, with disruption to global supply chains caused by the pandemic exacerbated by Brexit migration rules and border controls.
Economists have said that higher costs facing industry are likely to be passed on to British consumers in the form of higher prices for a range of goods and services.
The Bank of England forecasts inflation will rise to 4% this year, the highest level for a decade, before then fading closer to its target rate of 2% as temporary problems linked to the pandemic ease. However, some economists warn the rate of inflation could remain elevated as temporary disruption persists.
Construction firms said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record rise in June 2021. Among those materials reported as up in price, the most common were concrete, fuel, steel and timber.
Businesses noted a continued resumption of projects that had been delayed because of Brexit and Covid but said client confidence was being hit by shortages of raw material supplies and increased cost burdens.
Duncan Brock, the group director at Cips, said: “A combination of ongoing Covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.
“Material and staff costs went through the roof as job hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages.”