Supply chain bottleneck hits construction industry for another month

11 November 2021

Commenting on ONS construction output data for August 2021, Ian Taylor, partner and real estate expert, said: ‘Construction output fell by 1.0 per cent in the month to September and is now 1.0 per cent below the pre-pandemic February 2020 level - delivering a £334m or 3.5 per cent drop in new work since February 2020. However, this fall has stabilised somewhat in the last month. The overall fall in output hides a mixed picture since the start of the pandemic with infrastructure 47.3 per cent above and private commercial 27.0 per cent below their respective February 2020 levels in September 2021.

‘Continuing shortages of essential materials and labour are continuing to be the main drivers behind the decline. The pressure on input prices is feeding through to construction output price growth, which was 5.1 per cent in September 2021, the strongest annual rate of construction output price growth on record.

‘It was expected that growth in the market would slow after the initial dramatic recovery from the pandemic, but issues in the supply chain and the labour force are now critical and causing input prices to rise at a record rate, resulting in the industry’s growth coming to a halt and reverse.

‘This is now the sixth successive monthly fall in construction output caused by the supply chain issues and rising prices. The supply chain disruption is frustrating as order books are healthy, but the availability of materials is having a detrimental effect on projects that are underway. A survey showed that 10 per cent of respondents were unable to source materials, goods or services needed from within the UK in the last month. We can only hope that the bottlenecks in the supply chain can be resolved so that contractors can meet the demand in the market-place and reverse the trend of falling output.'