UK construction firms are experiencing some of the sharpest cost rises in nearly 30 years due to the war in Iran driving up prices for fuel and raw materials. The monthly Purchasing Managers’ Index (PMI) for UK construction activity fell to 39.7 in April, marking the lowest level since November and a significant drop from 45.6 in March.
Key Takeaways
UK construction firms are experiencing some of the sharpest cost rises in nearly 30 years due to the war in Iran driving up prices for fuel and raw materials. April saw a significant jump in purchasing prices and a decline in construction activity. The sector, which makes up about 7% of GDP and employs over two million people, is feeling the strain.
- UK construction firms face highest cost rises since June 2022
- Purchasing Managers’ Index (PMI) for UK construction fell to 39.7 in April
- Construction sector makes up about 7% of GDP and employs over two million people
- Input cost inflation for construction firms leapt to 81.4 in April, highest since June 2022
- Around 69% of survey respondents reported a rise in their input costs in April
According to Reuters, British builders saw one of the biggest month-on-month jumps in cost inflation on record in April. The S&P Global UK Construction Purchasing Managers' Index's measure of input cost inflation leapt to 81.4, its highest since June 2022. Around 69% of survey respondents reported a rise in their input costs in April, up from 48% in March.
Construction is one of the largest sectors of the UK economy, making up about 7% of GDP and employing more than two million people. The rapid acceleration of input cost inflation was seen across the sector and was described as the steepest in three decades of data collection by Tim Moore, economics director at S&P Global Market Intelligence.
Beyond construction, other sectors are also feeling the pinch. British services firms reported the sharpest acceleration in cost pressures in three-and-a-half years due to the Iran war driving up prices for fuel and raw materials. The S&P Global Purchasing Managers' Index for the services sector rose to 52.7 from March's 50.5, with more than half of firms reporting an increase in their average cost burdens in April.
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