Issue 254 | 9 November 2020 - Turner & Townsend alinea

Economic Week In Review | Issue 254 | 9 November 2020

Construction and property news

Construction PMI | The latest survey showed a sustained recovery in output volumes, but that the rate of expansion in October was the slowest since June. Common feedback was that demand for building materials outstripped supply.
House prices | The average UK house price has increased to £250,000 after the fastest rate of increase in four years (+7.5% compared to last year). However, Halifax says that the market will slow due to increased Covid measures and a weaker economy.
Crossrail 2 | TfL has secured a six-month £1.8bn bailout from the government after hugely reduced passenger numbers have severely affected TfL’s income. It falls short of the £4.9bn, 18-month support package needed, and places some strict conditions on TfL, such as the cancellation of Crossrail 2.
Design Concerns| In a warning to future schemes, the Chief Executive of Crossrail blamed political pressure to start work for creating design problems.
Net-zero carbon | Lord Debden, chair of the Committee on Climate Change warned that buildings will struggle to be let unless they are net-zero carbon.
Construction jobs | The Construction Industry Training Board’s latest forecast estimates that between 286,000 and 372,000 construction jobs (10-14% of the workforce) will be lost due to the effects of the pandemic. It does not expect jobs to normalise until 2025.

Materials, stocks, and currencies

Oil prices fell to a five-month low as Covid-19 case numbers have been increasing. Commentators expect the “bearish bias” to continue into November.
Stocks | Global stockmarkets surged as Joe Biden was announced as US President Elect. The MSCI All-Country World Index rose 8% last week. According to Bloomberg, the head of multi-asset strategy at Berenberg Bank said “Stock markets have responded to the US elections with relief.”

UK news

Recovery | Thoughts of a V-shaped recovery have reduced following a second lockdown. The National Institute of Economic and Social Research has warned of an increased risk of a double-dip recession. Capital Economics has pushed its forecast for the economy to return to its pre-pandemic peak by six months to the first half of 2023.
Quantitative Easing | The Bank of England announced £150bn of QE to boost lending (£300bn of bonds have already been bought this year), beating expectations of £100bn of easing. Interest rates were held at 0.1%.
Jobs | The Chancellor made a late hour announcement that the furlough scheme is to be extended through to March 2021. The Bank of England revised its forecast to show unemployment peaking in early 2021, at a higher level than previously forecast in August.
Real Living Wage | Today the London Living Wage increases to £10.85 in London (+10p) and £9.50 elsewhere (+20p). The National Living Wage (minimum wage) is £8.72).

Brexit

Preparedness | The Institute for Government and the National Audit Office both issued reports last week commenting on the UK’s preparedness for Brexit. Both reports warned that the end of the Transition Period could lead to disruption at the border, and trader readiness will pose the biggest challenge, regardless of the outcome of negotiations between the EU and the UK.
A return to talks? | Britain’s Environment Secretary, George Eustice said that there is “goodwill on both sides to progress things” as the UK and EU return to talks this week to attempt to achieve a deal. Talks have recently halted over state aid rules and fisheries. In 2019 fishing contributed 0.03% of economic output.
Internal Markets Bill | The House of Lords will debate the Internal Markets Bill today which has previously caused friction in the Brexit talks as it would allow Britain to undercut parts of the Brexit deal and the Good Friday Agreement.

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	5,910.02	5.97	-19.69
FTSE 250	17,917.83	4.09	-11.98
Nikkei	24,325.23	5.87	3.99
CSI 300	4,885.72	4.05	22.97
S&P 500	3,509.44	7.32	13.49
Nasdaq	11,895.44	9.01	40.35
CAC 40	4,960.88	7.98	-15.77
Dax	12,480.02	7.99	-5.66
$ per £	1.3162	1.80	2.93
€ per £	1.1075	-0.24	-4.58
Gold £/oz	1,483.58	2.28	29.89
Brent Oil $/barrel	39.45	5.31	-39.89

Weekly Summary

The US election was the main focus of last week, and, despite days of uncertainty, a new Democratic President seems to have boosted the markets and news that the President Elects’ first moves will be to set up a Covid taskforce and make moves to take the US back into the Paris Climate Agreement will be welcomed. With the Brexit deadline being so close and the contentious Internal Markets Bill up for debate this week, many will be looking to see what the appointment means for the UK.

Closer to home, jobs were top of the agenda for the week as the furlough scheme was scheduled to close at the end of October, just as the new lockdown was announced. An extension to the scheme will be welcomed but it seems that construction may have a challenge to retain skilled workers.

As we approach the end of the Transition Period, it is concerning (but perhaps not surprising) to see reports that firms are unprepared for changes to imports and exports at the end of the year. With just 52 days until the UK breaks all ties with the EU, we hope companies use the remaining time to understand the changes to prevent any possible delays.