Homebuilding grows at fastest rate since 2003

Fresh concerns have been raised about shortages of bricks and bricklayers after housebuilding picked up at the fastest pace for more than a decade last month.

The resurgent building activity and strong order books helped the UK construction sector add jobs at a record pace but also saw builders' costs rise as subcontractors hiked their rates and the prices of key building materials rose sharply.

The warnings came alongside a generally upbeat picture of the construction sector, which is continuing its recovery after a torrid time in the recession. Activity across civil engineering, housebuilding and commercial construction taken together continued to expand quickly in July, according to the Markit/CIPS UK Construction PMI report.

The activity reading for the construction sector, which makes up around 6% of the economy, slipped to 62.4 from 62.6 in June. That was above the 50-mark separating expansion from contraction and beat the consensus forecast for 62.0 in a Reuters poll of economists.

Chris Williamson, chief economist at survey compilers Markit said the report added to other signs the UK is "enjoying another period of strong economic growth". But he highlighted signs of price pressures coming from the construction sector.

"The survey also fires some warning shots in relation to inflation. Rates charged by subcontractors are rising at a near-record pace and prices paid for construction materials are also increasing sharply," said Williamson.

"Dwindling availability of construction materials, especially bricks, is feeding through to higher prices in many cases. Delivery times for materials from suppliers lengthened markedly again in July, and have shown the greatest deterioration ever seen by the survey in recent months."

The survey echoed recent reports about soaring pay rates for bricklayers and long waiting times for bricks. Suppliers have been under pressure to keep up with demand, scrambling to boost capacity and reopen plants mothballed in the recession.

"Survey respondents widely commented on low stocks and capacity shortages at suppliers," the PMI report said.

But brick manufacturers countered that "bricks have always been available" and production is running ahead of new housebuilding projects.

The Brick Development Association cited figures showing housing starts were up an annual 10% between January and May this year while for the same period, UK domestic brick production was up by 25%.

"With over 1,500 brick types in the UK, some types may have been in short supply in the short term, but this has not been the case with the more expensive bricks which have always been readily available," said the group's chief executive Simon Hay.

He said brick manufacturers were now working at a speed that was no different to pre-recession times.

"It just means that specifiers, contractors and procurement departments have to plan in advance again and not expect the brick of their choice to be available at a week's notice," added Hay.

The government seized on the construction survey as evidence the sector was "bouncing back" after the housing crash "led to the loss of a quarter of a million construction jobs".

"Through the Help to Buy scheme almost 40,000 households have now achieved their dream of becoming homeowners and helped housebuilding increase to its highest level since 2007," said housing minister Brandon Lewis.

Housebuilding was the big driver for construction in July as activity rose at the fastest pace since November 2003 on the back of strong demand for new housing and "favourable funding conditions", the PMI survey said.

Overall, hiring in the construction sector picked up at the fastest pace since the survey began in April 1997.

Source : Katie Allen - theguardian.com
www.theguardian.com/business/2014/aug/04/brick-shortage-housebuilding-grows-fastest-rate-2003