UK construction firms are facing some of the steepest cost increases in almost 30 years, as the war in Iran pushes up fuel, energy and raw material prices.
A closely watched survey of UK construction companies found that input cost inflation rose sharply in April, reaching its highest level since June 2022, when commodity prices spiked after Russia’s invasion of Ukraine. April’s rise in purchasing prices was also among the steepest recorded since the survey began in 1997.
The construction purchasing managers’ index (PMI), a key measure of sector activity, fell to 39.7 in April, down from 45.6 in March. Any reading below 50 indicates contraction, showing that activity across the sector continues to weaken.
The pressure comes at a difficult time for an industry that accounts for around 7% of UK GDP and employs more than two million people. The sector has already been affected by weaker demand, skills shortages and higher operating costs.
Around two-thirds of firms surveyed reported higher cost burdens in April. Many linked this to suppliers passing on higher fuel costs caused by the war, disruption in the Strait of Hormuz, and rising prices for imported materials.
Supply chains are also under strain. Vendor delivery times lengthened at the fastest rate since December 2022, with firms reporting international shipping delays and problems importing materials from the Gulf region.
At the same time, new work is not replacing completed projects quickly enough. Sales decisions are taking longer, and some companies are choosing not to replace staff who leave voluntarily.
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