The latest Markit PMI survey shows subcontractor charges are rising at fastest pace since survey began in 1997, however there was slower growth of output and new orders in March.
Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “UK construction output growth has settled in at a strong pace so far in 2015, although the recovery has lost some of its swagger since last year.
“All three main categories of construction activity saw a growth slowdown in March, in part reflecting softer new business gains as some clients delayed spending decisions ahead of the general election.
“However, UK construction companies are highly upbeat about their prospects for growth over the course of the next 12 months, helped by improving economic fundamentals, strong order books and a healthy pool of new invitations to tender.”
Subcontractor availability continued to fall sharply, which in turn contributed to the steepest increase in sub-contractor charges since the survey began in April 1997. Strong cost pressures persisted across the UK construction sector in March.
Anecdotal evidence widely suggested that stock shortages at suppliers and robust demand for construction materials had led to increased input prices. Moreover, delivery times from vendors worsened during the latest survey period, with firms reporting extended lead times for a range of inputs (especially bricks). Meanwhile, improving order books and sustained rises in new invitations to tender underpinned a marked upturn in business confidence.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said: “The construction sector’s strong recovery took on a gentler, quieter pace, with the housing sector continuing to lead the way ahead – but only just, and with the commercial sector a close second.
“A hint of restraint prevented employment levels rising much further. Some firms attributed slower momentum to concerns about the looming General Election, but new business still rose at a respectable pace compared to the average over the last few years. “Strong demand for construction materials was a key development and though major shortages are not yet apparent, there is some evidence that suppliers of construction materials must up their energy levels to quicken delivery times and raise capacity.
“The main takeaway from this month must be the highest levels of confidence seen in the construction sector for almost a decade. Though there may be some low-level obstacles still to come, the sector gets the green light as there is evidently belief that the future for the construction sector is a sustainable one.”