The UK construction industry is growing fastest in 24 years amid booming demand for home and commercial properties
The UK’s construction industry is growing the fastest in 24 years amid booming demand for home and commercial real estate.
Research group IHS Markit said their activity index – with values above 50 showing growth – rose from 64.2 in May to 66.3 in June, the strongest value since June 1997.
Commercial work has grown the fastest since 1998 and residential construction has not grown since 2003. Builders noticed a “rapid turnaround in demand”.
Construction boom: Research group IHS Markit said its activity index in the construction sector had reached its highest level since June 1997
However, with severe shortages in construction products and materials, prices rose at the rate they have seen since the survey began in 1997, which could fuel fears of a sharp surge in inflation if the UK recovers from the pandemic.
“Supply chains have again struggled to keep up with demand,” said Tim Moore, IHS Markit’s director of economics.
Master it on AIM
Building contractor Lords Group Trading plans to go public this month with a value of £ 150 million, another sign that construction is booming.
The construction, plumbing and heating supplier was founded in Buckinghamshire in 1985 by Nilesh Patel and is run by a member of his extended family, Shanker Patel. Four members of the Patel family will own 52 percent when they go public on AIM – with net income of £ 75 million.
Chairman Shanker Patel will own 29 percent – a £ 44 million stake – and earn an additional £ 10 million from the sale of free float stocks.
The shares are valued at 95 pence.
The Bank of England expects an inflation peak of over 3 percent, but predicts that the bottlenecks, some of which are behind the surge, will be temporary.
Construction collapsed at the beginning of the pandemic, but it recovered faster than other parts of the economy as it was less affected by social distancing restrictions and property prices were booming.
The strength of the rebound will fuel hope that the economy rebounded strongly in the second quarter of the year after a 1.6 percent decline in the first quarter left production 8.8 percent below pre-pandemic levels.
Martin Beck, advisor to the EY Item Club, said: “The economy seems to have shrugged off the delay in lifting the remaining Covid restrictions.”
Charlie Bean of the Office for Budget Responsibility said the recovery had been stronger than expected, but it remained to be seen how many migrant workers would have left the UK, how many workers on leave would return to their jobs and how many companies would go bankrupt.