Economic Week In Review | Issue 253 | 2 November 2020
Construction and property news
Profit warnings | EY has warned that profit warnings from listed construction companies have reached a record high. 28 warnings were issued in the first nine months of 2020, compared to 18 in all of 2019. Nearly 60% of the Construction & Materials sector issued at least one warning in the first nine months.
Payment terms | The government is increasing prompt payment requirements on public projects. Under current rules, 75% or more of invoices must be paid in 60 days. From April 2021 85% of invoices will need to be paid in 60 days. The original plan was for the threshold to be 95% but trade members said they would struggle to achieve this. Firms must however demonstrate that a compliant action plan is in place to meet the 95% threshold in the future.
City take up | According to Bloomberg, a scarcity of large modern office space is encouraging large employers to secure space for the future now, despite uncertainties around home working.
Improving turnover | According to the latest Business Impact of Covid Survey from the ONS, fewer construction firms are reporting falling turnover.
Materials, stocks, and currencies
Global equities are on course for their worst week since March. Analysts have suggested that the fall has been a “run-of-the-mill, short-term correction” as investors have taken profits from “winning positions”. The fall followed Alphabet, Amazon, Apple and Facebook reporting third-quarter sales which beat analysts’ forecasts.
Oil | Prices fell as several countries announced a second lockdown. It is expected the move will force OPEC to reconsider its scheduled increase of nearly 2 million barrels a day of output at the start of 2021.
Roofers | A survey by the National Confederation of Roofing Contractors has found that 91% of respondents are either “busy” or “very busy” but 55% have reported material shortages (mostly roof tiles, timber, felt, insulation, and slate).
Concrete | Keltbray has committed to using 11,000 cubic metres of EFC, a low-carbon concrete by the end of June 2021 to help ensure the continued development of the material.
Bricks | Ibstock has restarted production at its Laybrook facility following a six-month shutdown.
Spending | The IMF has encouraged the UK to continue spending in order to invigorate a recovery. Output for 2020 is now expected to shrink 10.4%, a worsening of 0.6%. The Fund has called for a “meaningful additional push” and that the UK will need to count the costs of the crisis once a durable recovery has been established.
New restrictions across Europe are expected to undermine economic recovery for the rest of the year. GDP across the eurozone is currently 4.3% lower than the end of 2019.
US election | Wall Street analysts have warned if the US election is unclear or contested it would put investors in “completely uncharted territory”. Fears over delayed results have been increasing partly due to a surge in mail-in ballots, early voting and social unrest.
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
$ per £
€ per £
Brent Oil $/barrel
It was encouraging to see data showing that construction company turnover has improved from the height of lockdown, and that supplier surveys have reported that in general, firms are busy. However, as the US Presidential campaign and the Brexit talks enter their final days, at the same time that more countries are re-entering lockdown, only time will tell how confidence holds up.
Whilst the new lockdown period that was announced on Saturday will no doubt be detrimental to the economy, and morale, it was promising to see construction included as a service which will continue, reflecting the excellent work done across the sector to ensure that work can continue safely.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.