Issue 262 | 11 January 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 262 | 11 January 2021

Property and construction news

PMI | Construction output grew for the seventh month in a row according to IHS Markit/CIPS. The survey showed that some of the growth is a result of projects which were delayed in 2020. New orders increased for the seventh month in a row.
Housing market | Barratt homes sold a record number of homes in the second half of 2020, agreeing on sales of 13,588 homes, 14.3% higher than 2019, boosted by the stamp duty holiday. Yet, Halifax has suggested that the growth in house prices has slowed as the end of the holiday nears.
Site Operating Procedures | The latest update requires sites with five or more Covid-19 cases within 14 days to contact their local Public Health England protection team. Construction is amongst the industries to be targeted by the government for rapid testing.
Plant sales returned to just below pre-Covid levels in November, but are expected to fall again in the December analysis.
Leasehold reform | Leaseholders are to be given the right to extend leases by up to 990 years and pay no ground rent. Retirement housebuilders have voiced concerns that they are no longer exempt from the changes which could increase the price of retirement homes and adversely affect the supply “at a time when it is needed more than ever”, according to McCarthy Stone.
City rents | 122 Leadenhall reported a record office rent in the City of London, achieving £110/sqft for its 7,000sqft top floor.

Materials, stocks, and currencies

Copper prices have increased recently following fiscal stimulus plans, industrial recovery, as well as an intensifying second wave of Covid-19 in South America. However, many think that the scrap copper market could become a more significant source of supply.
Steel scrap | China has recently clarified its import rules for scrap metal, pushing steel scrap to a multi-year high.
Oil prices saw the biggest weekly growth as Saudi Arabia cut output by 1 million barrels a day in February and March, underpinning prices.

UK news

Financial failure | The Financial Conduct Authority has warned that 4,000 financial firms have a heightened risk failure due to Covid-19 impacts. A survey revealed that six in ten companies expected to reduce net income, with most citing a reduction of between 1% and 25% but 700 expect a fall greater than 75%.
Small businesses | The Federation of Small Business (FSB) has warned that at least 250,000 small companies could close this year unless the government releases more emergency aid. FSB Chairman Mike Cherry said that “the development of business support measures has not kept pace with intensifying restrictions”.
Equivalence | Talks start between the UK and the EU soon to determine regulatory co-operation for financial services.
Borders | Logistics firms have commented that the real challenge of Brexit will be in the weeks ahead as normality returns to freight following months of stockpiling. Some port managers have raised concerns that many businesses have assumed that as tariffs have been removed, so have customs and therefore are unprepared for new administrative requirements.

Global news

US jobs market | In its first monthly fall since April, the US lost 140,000 jobs, mainly in the hospitality and leisure sectors (a combined loss of 498,000 jobs) but growth was seen in retail, manufacturing, and construction sectors.

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	6,873.26	4.84	-9.42
FTSE 250	21,064.24	2.81	-2.33
Nikkei	28,139.03	2.53	17.93
CSI 300	5,495.43	5.45	32.00
S&P 500	3,824.68	1.83	17.13
Nasdaq	13,201.98	2.43	43.83
CAC 40	5,706.88	2.80	-5.47
Dax	14,048.53	2.41	4.20
$ per £	1.3584	0.67	4.01
€ per £	1.1085	-0.19	-5.64
Gold £/oz	1,363.04	-1.85	13.98
Brent Oil $/barrel	55.99	8.09	-13.84

Weekly Summary

In yet another week of big headlines such as the terrible events in the US Capitol Building, and the positive news that another vaccine has been approved for use in the UK, along with a more rapid roll out, there were some bright spots for property and construction, as well as some points of caution.

It is positive to see that output has continued to be steady and new orders are increasing, but we should be mindful of how this bears out across the sectors, particularly between new work and repair and maintenance, and how much is composed of previously delayed work.

Key things to watch out for this year are: business finances as Covid-19 restrictions intensify; material pressures throughout the global second wave; and how the impact of new border processes progress through the year.