Building firm Beard responds to construction sector growth slowdown

Fraser Johns, finance director at Beard

Swindon-based construction firm Beard has responded to statistics which show a national slowdown in the construction industry during December.

Figures from IHS Markit and the Chartered Institute of Procurement and Supply published on January 7 showed that fresh pandemic restrictions were hitting demand.

Delays to decision making by clients contributed to to the weakest pace of growth in the sector for three months, said building firms.

However, the survey of 150 construction companies suggested supply chain problems were starting to ease.

Residential construction activity saw the strongest growth, according to the report, and was the only category to gain momentum in December.

Commercial building lost its position as the best-performing segment, with the recovery easing to its lowest since September.

Meanwhile, civil engineering activity decreased slightly at the end of 2021, which ended a nine-month period of expansion.

Fraser Johns, finance director at Beard, said: “While growth slowed in December, the overall picture is a positive one. Supplier delays are easing slightly, price inflation is reducing and starting to find its new level, and customer demand has remained resilient.

“We are clearly still not quite out of the woods, with Covid cases rising and remaining uncertainty surrounding this latest variant. Construction firms will need to ensure their safety measures are up to scratch.

“While there are certainly challenges, the new year will present opportunities. Customer demand hasn’t been hampered too much by the new variant, and in fact the latest rise in overall new order volumes was the largest since August.

“To be successful in 2022 construction firms will need to be adaptable to overcome the hurdles on the horizon, which entails strong collaboration with all stakeholders.

“At Beard we are implementing thorough measures to help protect staff and we continue to keep our relationships with suppliers top of our agenda, ensuring frequent communications and prompt payments.

“This will continue to benefit all stakeholders from suppliers through to the end customer.”

Tim Moore, Director at IHS Markit, which compiles the survey said: “UK construction companies ended last year on a slightly weaker footing as renewed pandemic restrictions held back the recovery, especially in commercial work and civil engineering. Some firms commented on disruption from rising Covid-19 cases, while others noted a lack of new work to sustain the rapid growth rates seen earlier in 2021.

“The worst phase of supplier delays seems to have passed as the availability of construction products and materials continued to turn a corner in December.

“While suppliers to the construction sector have caught up on backlogged work and boosted capacity, there were still widespread reports citing unresolved transportation issues and driver shortages.

“Input cost inflation moved down another notch in December, helped by the alleviation of some supply chain pressures. The latest rise in purchasing prices was far slower than the 24-year peak seen last June.”

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “Though the overall index moved down slightly in December there was light at the end of the tunnel for builders in terms of the strongest order numbers since August, reduced pressure on business costs and some improved delivery times for essential materials.

“Residential building has powered on every month since June 2020 and was the best performing category in the last month of 2021. Commercial building struggled to gain a stronger footing in a weakened UK economy and civil engineering activity fell back into contraction.

Though supply constraints were still hiking up prices, inflation was the lowest since March as materials production carried on apace reducing supply restrictions.

“It was shipping delays and haulage shortages that remained the significant gripes in the industry as over a third of supply chain managers faced longer wait times.

“Though this was an improvement on the previous month and the best since November 2020, it was still a factor affecting builders’ forecasts for 2022 as business optimism fell to the joint-lowest for almost a year.”