UK Construction Confident but Supply Shortage Looms
UK construction is seeing a supply shortage as it continues its powerful recovery.Reuters

The UK construction sector saw its twelfth consecutive monthly rise in output during April.

Markit said its index compiled from surveys of construction industry purchasing managers (PMI) came in at 60.8 in April, well above the neutral 50 figure.

Though a slowdown from March's 62.5, this still represents yet another month of robust output growth in the construction sector's recovery from its collapse in the aftermath of the financial crisis.

"Construction growth has started to moderate from the rapid pace seen over the winter, but strong rises in new work and payroll numbers provide ample optimism that output will expand strongly over the course of 2014," said Tim Moore, senior economist at Markit.

"Better economic conditions, a surge in house building, improved access to finance and greater investment spending are all important tailwinds for UK construction growth this year."

House building work lifted during the month as construction firms chase the low-hanging fruits of profit in the housing market, where demand is reviving thanks to cheaper mortgages and house prices are soaring because of the lack of affordable homes in the market.

But the powerful construction recovery is marred by supply shortages, as firms struggle to find enough skilled workers and materials to cope with the levels of work.

"Reflecting the fast pace of growth filtering through the supply chain, vendor performance in April continued to deteriorate, typified by shortages of capacity, low stocks and worsening lead times," said David Noble, chief executive at the Chartered Institute of Purchasing & Supply (CIPS), which compiles the PMI report with Markit.

"Beyond this, the easing of cost inflation this month was acknowledged to have brought some relief to the industry."