Builders' costs surge at fastest pace since 2011 after plunge in pound

A steep rise in costs caused by the plunge in the pound overshadowed an improved overall performance for the construction sector last month.

Costs rose at their fastest pace since April 2011 as suppliers hiked prices following the fall in sterling after the Brexit vote, according to purchasing managers' index (PMI) data for November.

:: House Builder warns on Brexit uncertainty

The increase cast a pall over better-than-expected overall performance for the sector, which posted a better than expected reading of 52.8 - where 50 separates growth from contraction.

It was an eight-month high and the third month in a row of growth, with house building the best performing category and job creation being maintained, the report said.

There were also signs of some commercial projects, put on hold after the referendum, being resumed.

But the report found that heightened economic uncertainty was weighing on growth and optimism remained close to lows last seen in early 2013.

Stronger inflation had led to "intense competitive pressures and squeezed margins", it added.

Tim Moore, senior economist at IHS Markit (Stuttgart: A1139A - news) , which compiled the survey, said: "Input cost inflation accelerated to its fastest for five-and-a-half years, driven by sharply rising imported raw material prices.

"A number of firms cited uncertainty related to supplier price hikes as an emerging threat to the construction sector."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "While the latest surveys suggest that the construction sector should return to modest growth in the fourth quarter, there are still significant uncertainties for the sector going forward."