A heavy dose of caution

Economic Week In Review | Issue 280 17 May 2021

Property and construction news

  • Skilled labour | Hudson Contract reported that skilled wages fell on a monthly basis in every area, except for Wales, in April. However, because of last year’s dramatic fall and steep recovery, the annual change is +19.6%.
  • Procurement bill | New legislation to reform public procurement will be introduced. As well as consolidating 350+ processes into a single framework, it will make it easier for public bodies to contract with preferred suppliers – those who satisfy specified political outcomes beyond the remit of the contract – regardless of price.
  • Housing | House prices have increased 8.2% in the last year, the highest growth rate for five years. Analysts and commentators suggest that the stamp duty holiday has encouraged sales, creating a “fear of missing out” and concerns over future price increases.
  • Construction output | Data from the ONS showed that output in March reached its highest level since September 2019. Infrastructure and private housing have pushed new work above pre-pandemic levels. Commercial remains almost 10% smaller.

Materials and commodities

  • Waste bricks | Kenoteq, a spin-out firm from Heriot-Watt University has secured £1m of funding to commercialise production of bricks made from construction waste and expects more than 2 million K-Briqs to be made a year.
  • Iron ore prices fell from a record high as it is expected that China will take steps against speculative activity such as mills spreading rumours and hoarding materials.
  • Brexit certificates | The Construction Products Association warned that changes to certification rules need to be resolved, and the UK doesn’t have the capacity to test products to new standards. Current CE markings are to be replaced by the UKCA mark as part of the UK’s divergence from EU regulation.

UK news

  • Amazon jobs | As it opens new warehouses Amazon is to hire 10,000 people in the UK, taking its total UK workforce to 55,000. Business Secretary Kwasi Kwarteng called the announcement “a huge vote of confidence in the British economy”.
  • Labour | The Chartered Institute of Personnel and Development, along with Adecco, have warned that as employers plan to hire at the fastest rate in eight years, they may struggle to meet their needs following the exodus of EU workers in 2021. Job openings posted on Adzuna’s jobs page increased 18% in six weeks, whilst there has been a steep decline in people looking for a job.
  • Super-deduction | The ‘super-deduction capital allowance’ is now in force, incentivising investment. Limited companies investing in new plant and machinery for their own use can reduce their Corporation Tax bills by claiming 130% of the asset value against pre-tax profit until the end of March 2023, cutting their tax bill by 25p for every £1 invested.
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 7,043.61 -1.21 21.45
FTSE 250 22,336.10 -1.93 42.62
Nikkei 28,084.47 -4.34 40.16
CSI 300 5,110.59 2.29 30.61
S&P 500 4,173.85 -1.39 45.75
Nasdaq 13,429.98 -2.34 48.98
CAC 40 6,385.14 -0.01 49.27
Dax 15,416.64 0.11 47.31
$ per £ 1.4095 0.68 16.20
€ per £ 1.1310 0.87 3.56
Gold £/oz 1,307.95 -0.08 -9.21
Brent Oil $/barrel 68.71 0.63 111.42

Weekly Summary

With hugging, indoor leisure, and some international travel back on the agenda this week, Boris Johnson has urged a “heavy dose of caution”. The same could be said for current news items with some misleading comparisons. Given the severity and timing of last year’s nadir, it is more important than ever to see data in context.

The week’s data on construction output is encouraging with further improvement to all new work levels. However, the recovery is still unbalanced between sectors, although some sectors will still be more affected by restraints imposed by social distancing which could drive productivity, and therefore output, down.

The positivity of increasing construction output and an improving jobs market could put pressure on wages, especially if output increases beyond the capacity of the labour market and there are no innovative improvements to productivity, especially in light of the UK’s ‘missing workers’ who have returned to the EU during the pandemic and Brexit.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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