Just around the corner...

Economic Week In Review | Issue 252 | 26 October 2020

Construction and property news

  • CPA forecast | The Construction Products Association has forecast construction output to fall 14.5% this year but that the industry shows promising signs of recovery. However, a deterioration in the labour market alongside a No Deal Brexit could make this winter crucial for determining how sustainable the recovery is. Output is expected to increase 13.5% next year.
  • Materials sales | Builders’ merchants reported that sales have continued to recover albeit at a slower pace than in the last two months. Sales remain 3.9% lower than in August 2019 (the latest data available).
  • London Recharged | The City of London Corporation has issued its vision for the City in 2025. It includes recommendations for streamlined planning, dedicated innovation spaces, an aspiration for 20% of new tenants to be new businesses to the City, and for retail spaces to be transformed into affordable hubs for start ups.
  • Senior Living | Lone Star has offered to buy McCarthy & Stone in a cash offer of £630m. Lately, private equity firms have been taking advantage of discounts to listed UK companies.

Brexit

  • Too late? | The Treasury Committee has written to Rishi Sunak over concerns over delays to computer systems which will be necessary for customs requirements from 1st January. The delay to the system means that businesses are not able to properly prepare for Brexit.
  • Bricklayers, masons, and welders | The Home Secretary has rejected advice from the Migration Advisory Committee to include bricklayers, masons, and welders in the Shortage Occupations List (the list of skills which are deemed to be in shortage in the UK and therefore have more favorable visa requirements post-Brexit), instead suggesting that people made unemployed by the pandemic should retrain for the roles.

Materials

  • Iron ore | Both Vale and BHP have reported strong demand for iron ore in Q3. It has been the best performing commodity of 2020, with a price increase of 28% but there are signs that demand is starting to soften in China.
  • Copper price | Demand for copper has pushed prices above levels last seen in June 2018, and 12% higher than at the beginning of the year. In the depths of the Covid-19 lockdown, prices fell to $4,617.50 and have since recovered to $6,879.50 following strong demand from China as well as research on antimicrobial properties.

UK news

  • Retail sales in September were 4.7% higher than in 2019, marking the fastest pace of growth since April 2019. Analysts expect that retail sales are benefiting from “enforced savings” which were accumulated during lockdown as well as fewer foreign trips.
  • Consumer confidence | Despite increased retail sales, the index of consumer confidence fell 6% to -31 in October as coronavirus cases increased and restrictions tightened, raising concerns of a recession.
  • UK PMI | The composite PMI across all sectors, showed a sharp slowdown in growth as the overall indicator fell to 52.9 which still denotes growth. The survey showed a deterioration in the labour market and a slight boost to businesses from pre-Brexit preparations.
  • Further stimulus? | According to Capital Economics, the “stuttering recovery” makes further stimulus and government borrowing likely. The Bank of England is expected to introduce negative rates as members of the Monetary Policy Committee have voiced support.

Global news

  • Eurozone contraction | The composite PMI survey fell to 49.9 in October, from 50.4 in September. Manufacturing still showed growth at 57.8 whilst services fell to 46.2, a five-month low.
  • Homeworking | According to The Wall Street Journal, only 10% of office workers in Manhattan had returned to their desks. Offices are suffering from unprecedented uncertainty, but it is expected this will not last forever, and some buyers are taking advantage of falling prices.
Tender Price Index

Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 5,860.28 -1.00 -19.99
FTSE 250 18,109.57 1.61 -9.92
Nikkei 23,516.59 0.45 3.14
CSI 300 4,718.49 -1.53 21.09
S&P 500 3,465.39 -0.53 14.65
Nasdaq 11,548.28 -1.06 40.16
CAC 40 4,851.38 -1.71 -15.22
Dax 12,645.75 -2.04 -1.93
$ per £ 1.3035 0.83 1.58
€ per £ 1.1010 -0.22 -4.92
Gold £/oz 1,457.78 -0.87 24.27
Brent Oil $/barrel 41.77 -2.70 -32.65

Weekly Summary

With two key events just around the corner – the US Presidential election, and the UK’s exit from the UK – it’s little wonder that uncertainty is showing in the market. There are some positives such as growing retail sales, material sales, the CPA’s forecast of a rebound next year, as well as a plan to reinvent the City for modern occupancy.

However, there are some significant concerns that will play out over the next few months such as delays to key pieces of infrastructure which will be necessary after Brexit, as well as the announcement on Shortage Occupations this week.

Things to look out for this week

The U.K. and the EU have moved into an intensive phase of talks, expected to last until mid-November, in an effort to achieve a deal after Britain temporarily walked away from talks earlier this month.

Trade talks with the EU are expected to continue until the middle of the week, following optimism over a deal that could be signed.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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