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BDA challenges Markit/CIPS Construction PMI on brick shortage claims

January’s Markit/CIPS Construction PMI included a “highly misleading and unhelpful” comment on the UK construction industry, according to a leading trade association.

The Brick Development Association, which represents 99 per cent of UK brick producers, said that a comment from the Chartered Institute of Procurement and Supply (CIPS), released alongside the PMI update, provided a “sloppy narrative that is damaging to our industry”.

Yesterday’s Markit/CIPS release included a comment from CIPS chief executive David Noble, who said that “supply chains were weighed down by the pressures of a shortage of bricks and blocks as delivery times became longer in an attempt to fulfil recent orders from last year”.

However, the BDA has hit back, claiming that brick production has risen significantly in the past year, citing data from the Department for Business, Innovation and Skills (BIS).

The BIS data, released yesterday, shows that brick production in December 2015 was 16 per cent higher than the same month a year earlier. Data for the year shows that brick production was 7 per cent higher in 2015 as a whole compared with 2014.

Year-on-year, stocks of bricks were 69 per cent higher in 2015 than in 2014, hitting 592m, the highest level recorded since 2011.

However, the BIS data also shows that brick deliveries in December 2015 tumbled by 15 per cent compared to December 2014, while deliveries for the year were 5 per cent lower in 2015 than in 2014 – the first annual fall in deliveries since 2012.

This supports the claim from CIPS that contractors had seen a slowdown in brick deliveries over the latter half of the year.

In a statement, CIPS said that the PMI was “a subjective interpretation of data from the procurement community”.

“The PMIs are highly respected and long-standing reports used by many commentators and bodies such as the Bank of England,” it added.

“Anecdotal evidence from respondents to the survey pointed to shortages in bricks and supplies, which was reflected in our commentary.”

BDA chairman Michael Ankers said he found it “astonishing” that CIPS would make claims of a brick shortage “without evidence”.

“If there are delivery issues further down the supply chain it would be very helpful to understand the cause,” he said.

“Unfortunately, CIPS was unable to provide information on the number or organisation type of respondents finding bricks hard to obtain. Without that evidence, I find it astonishing that the CIPS felt authorised to comment on the availability of bricks.”

January’s Markit/CIPS Construction PMI showed that activity in the construction industry had slowed to its lowest growth rate for nine months, with housing activity posting its most sluggish increase for two-and-a-half years.

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