Issue 281 | 24 May 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 281 | 24 May 2021

Materials and commodities

Steel demand | Estimates for the amount of steel needed in public infrastructure projects over the next decade have increased by 50% to
7.6 million tonnes.
Mortar rationing | Brickwork contractors have had mortar supplies limited by major cement suppliers as some suppliers have temporarily stopped taking orders. The Mineral Products Association has explained that the shortage is due to a mix of high demand, kiln shutdowns for maintenance in Q4 2020, and trouble finding hauliers.
Steel imports | Industry bodies have warned the government not to remove UK steel safeguard measures as recommended by the government’s Trade Remedies Investigations Directorate. UK Steel director-general has warned that the proposal was a “hammer blow to the UK steel sector” leaving the UK as a “magnet for huge volumes of steel imports”.
Metals | As Chinese authorities cautioned commodity companies over “excessive speculation”, the price of copper and aluminium fell at the London Metal Exchange, and iron ore prices fell 7% on China’s Dalian exchange. It has fallen nearly 20% after reaching a record high earlier this month.

Property and construction news

Demolition | Analysis of the top 20 UK demolition specialists by The Construction Index has found that overall revenue grew by 6% but pre-tax profits have fallen by 7% in the last year.
Labour | Recruitment firm Hays has reported that temporary construction vacancies have risen 50% in the last six weeks and adverts for permanent jobs have increased 55%.

UK news

Inflation | Consumer Price Inflation more than doubled in April to 1.5%. Price increases were driven by clothing and footwear, and gas and electricity.
Immigration | UK Home Secretary Priti Patel will announce “wholesale” reforms of the UK’s immigration system. It is expected that new work routes, a suspension of caps for skilled workers and healthcare visa extensions will be announced.
Haulage | It isn’t just cement suppliers having trouble with distribution, supermarket prices are under pressure as new IR35 tax rules have pushed up driver costs and there is a shortfall of 70,000 HGV drivers, fuelled by EU workers repatriating during the pandemic.
Retail sales jumped 9.2% in April with sales of clothing increasing by 70% compared to March. Until mid-April clothing and furniture shops were classed as “non-essential” and therefore closed under covid-restrictions.
PMI | The flash composite index reached 62.0, a record high since January 1998. Services, manufacturing output and manufacturing registered at 61.8, 63.2, and 66.1 respectively. Whilst confidence is clearly improving, the data shows the fastest increase in average cost burdens since August 2008.
Trade deal | The UK has offered trade deal terms to Australia which would phase out import taxes over a period of 15 years.

Global news

Europe | PMI readings for services in Germany and France showed an improving market with increasing confidence. Services expanded at the fastest rate in ten months. However manufacturing in both countries was less optimistic with factories citing delays and the unavailability of labour as current price pressures.
Global tax | The Group of Seven leading advanced economies are nearing an accord on corporation tax of multinationals. It is expected that an agreement could be reached at the end of the week.

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	7,018.05	-0.36	17.10
FTSE 250	22,399.42	0.28	36.59
Nikkei	28,317.83	0.83	38.89
CSI 300	5,134.15	0.46	32.70
S&P 500	4,155.86	-0.43	40.62
Nasdaq	13,480.99	0.38	44.57
CAC 40	6,384.41	0.02	43.69
Dax	15,437.51	0.14	39.40
$ per £	1.4157	0.44	16.29
€ per £	1.1626	0.14	4.02
Gold £/oz	1,329.63	1.66	-6.76
Brent Oil $/barrel	66.44	-3.30	89.13

Weekly Summary

Market data is increasingly showing that the economy is improving and consumer confidence is returning, however, this resumption of economic activity is putting strain on already stressed supply chains.

Some of these stresses seem to be resolving, or at least have ways to increase production and rebalance output, but it looks increasingly likely that the UK will feel the impact of a smaller labour force as economic output increases. This challenge is not just constrained to construction labour, but affects the wider economy in roles that may have previously been underestimated, such as HGV drivers, as well as the prevalence of self-employment amongst these workgroups.

As the economy opens up and growth returns, it is increasingly important to understand the flow of goods and services to construction projects and how global issues can disrupt these, so that work can be done to mitigate these impacts.