Supply Chain Update: Housing Starts Rise, but Homebuilding Growth Slows

There are positive signs in this week’s data roundup, with materials sales up and onsite debuts up. Inflation continues to dominate sector analysis, however, and there are worrying signs for homebuilders. Also, have you ever asked for a raise?

CPA: increase in material sales

Demand for construction materials increased in the first three months of this year, according to research from the Construction Products Association (CPA).

Significantly more manufacturers saw their sales volumes increase between Q4 2021 and Q1 2022 than they saw them decrease, with positive balances of 43% of heavy manufacturers and 50% of light manufacturers reporting ‘a growth. This correlates with the findings that workloads increased for a positive balance of small contractors, as well as surveyors and civil companies.

However, the APC took note of official data pointing out that material prices rose nearly 22% in the first three months of this year. As such, materials have been the main driver of cost inflation for all product manufacturers, despite reports of soaring fuel and power costs.

Glenigan: other projects are starting

The value of underlying on-site housing starts has increased by almost 10% in the last period analyzed by the Glenigan industrial intelligence unit.

The data showed that the amount of work in progress in the three months to the end of May was almost a tenth higher than in the previous rolling quarter, after adjusting for seasonal fluctuations and removing individual projects worth greater than £100 million.

But Glenigan called for “cautious optimism” when analyzing the results. He noted that material and labor shortages, in addition to rampant inflation, were delaying projects.

“While the outlook looks decidedly more positive than in recent months, there is still some way to go before the sector returns to the growth levels seen in spring/summer 2021,” the data firm said.

CIPS: a level of housing construction close to stagnation

The closely watched Housing Construction Index produced by the Chartered Institute of Procurement and Supply (CIPS) recorded 50.7 in May 2022 – its lowest level since May 2020. Although residential construction activity is on the rise for 24 consecutive months, the latest reading shows it has almost stabilized in recent weeks.

Growth in non-residential construction remained strong last month, with an index of 59.8 in May, while civil engineering activity rose for the fifth month in a row, this time to a score of 55.5. Although three out of four purchasing managers saw price increases in May as inflation remained rampant, delays in receiving materials were the least prevalent since February 2020.

Some companies have noted an improvement in the availability of construction items, despite ongoing difficulties such as logistical bottlenecks, Brexit-related trade frictions and staffing shortages at suppliers.

Forbes: construction bosses respond to payroll demands

Three quarters of construction workers have considered asking for a pay rise due to the cost of living crisis, according to a survey by personal finance experts Forbes Advisor.

The survey of more than 5,000 UK adults across all sectors found that one in seven workers in the construction industry have gone ahead and demanded higher wages. And just over a third of those who took the plunge were rewarded with better pay – the third highest of any industry included in the survey.

However, only 3% of construction employers have volunteered to increase the wages of their staff. Across all sectors, people aged 35 to 44 were the most likely to ask for more money, while people aged 55 and over were the least likely. The North East received the most claims and the South West the least.

Alice F. Ponder