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3 Minutes to Read (Reuters) – LONDON (Reuters) – Last month, the construction industry in the United Kingdom grew at its quickest rate in 24 years, boosted by increased demand for new houses and commercial development, but the sector was hit by a record spike in raw material costs. On the roof of a property in London, Britain, on August 3, 2020, a construction worker carries a scaffold pole. Kevin Coombs/Kevin Coombs/Kevin Coombs/Kevin Coombs/Kevin Coombs/ The monthly purchasing managers’ index statistics highlighted the pace with which the UK’s broader economy is recovering as coronavirus limitations are lifted, as well as how supply chain bottlenecks are causing inflationary pressures. The IHS Markit/CIPS construction PMI increased to 66.3 in June from 64.2 in May, the highest level since June 1997 and well beyond all economists’ expectations in a Reuters poll. The property market in the United Kingdom has been helped by a tax cut for first-time buyers, which will be phased out by the end of September, according to finance minister Rishi Sunak. The PMI’s input cost component was at an all-time high since the series began in April 1997, and delivery timeframes were also at an all-time high. Tim Moore, IHS Markit’s economics director, said, “Supply chains once again battled to keep up with demand for construction products and materials.” Last month, the Bank of England predicted that inflation will surge above 3%, but that the bottlenecks that are contributing to the rise will be temporary. Construction fell into a depression at the outset of the COVID-19 epidemic, but recovered faster than other sectors of the British economy because it was less affected by social-discrimination laws and benefited from rising house values. Construction output in April was marginally higher than pre-pandemic levels, according to official figures. Purchasing managers’ confidence remained high, although it fell to its lowest level since January, owing to rising costs and difficulties finding construction workers. “Elevated cost pressures and concerns about labor availability appear to have dampened business optimism at certain construction companies,” Moore added. Separate PMI statistics for the private sector as a whole, which includes the much larger services sector and manufacturing, showed a modest drop from May’s record-high 63.0 to 62.6 in June. David Milliken contributed reporting, and Catherine Evans edited the piece./nRead More

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