UK construction firms face sharpest rise in costs in nearly 30 years
Summary
Construction companies in the UK are facing the highest increase in costs in nearly 30 years, mainly due to the war in Iran pushing up prices for fuel and materials. The construction sector is also shrinking, with fewer new projects and lower demand, which is causing some companies to warn about lower profits.Key Facts
- UK construction input costs rose sharply in April, the biggest jump since June 2022.
- Higher fuel costs from the war in Iran and a shipping blockade are driving up prices for materials.
- The UK construction purchasing managers’ index (PMI) fell to 39.7 in April, showing the sector is shrinking.
- Readings above 50 on the PMI mean growth; below 50 means contraction; the sector has not grown since January 2023.
- Construction makes up about 7% of the UK economy and employs over two million people.
- Many construction firms are losing staff and seeing slower new project starts.
- UK housebuilders Crest Nicholson and Berkeley issued profit warnings because of higher costs and lower demand.
- Builders’ merchant Travis Perkins reported a 1.7% drop in revenue due to weak construction activity in early 2024.
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