Construction impacted by cost of living crisis, inflation, and supply chain issues

In response to a concerning skills shortage, the UK government has officially added several construction trades to its shortage occupation list (SOL) while significantly relaxing immigration rules for these roles.

The UK construction industry is being adversely affected by the cost of living crisis, inflation, and continued disruption caused to supply chains, says leading construction industry intelligence provider Barbour ABI.

In its latest monthly Snap Analysis report, it highlights the uncertainty caused by the cost of living crisis, 25% inflation for building materials, and the conflict in Ukraine and ongoing pandemic issues as major factors.

The report compiles data from each sector of the construction industry in the UK and from each stage of the construction pipeline, from planning application to contract award to provide a holistic picture of the industry in the short, medium, and longer term.

Tom Hall, Chief Economist at Barbour ABI, said: “June was a good month in terms of the value of contracts awarded with a 15% increase on May’s value to £6.4bn. However, the levels seen in Q2 are well below the record levels seen in Q1 and could reflect the uncertainty caused by the cost-of-living crisis, inflation of 25% in the cost of materials and disrupted supply chains.

“June’s positive news on the value of contracts awarded is tempered by the fact that not all sectors performed well. Infrastructure construction was really the only sector to be showing positive potential with others giving cause for concern. The concern deepens as we look at the picture shown by planning applications and approvals. Nonetheless it is good news that new work is progressing, albeit at lower rates than previously.”



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