Economic Week In Review | Issue 285 | 21 June 2021
Materials, commodities and currencies
US Dollar | The Federal Reserve brought forward the timing of the first post-pandemic interest rate rise which increased the value of the dollar. This, in turn, affected dollar-based commodities, pushing the price of oil down.
Chinese reserves | China will release its reserves of copper, aluminium, and zinc in order to stabilise prices. It is the first time in a decade that national reserves have been released. Authorities in China have been taking steps to crack down on speculation in the commodities and metal markets.
Steel prices | British Steel has increased prices by another £80/tonne due to the “continued high level of raw material costs, and to increasing pressures on availability”.
US timber | Timber prices in the US have fallen markedly as homeowners switch their spending to going out to eat and shopping as Covid-19 rules are eased. Prices have fallen 48% from a peak of $1,686 in May.
Shipping | A recent report by the BBC highlighted the current challenges of moving goods around the world, reporting that 40-ft containers from China had increased from $2,500 – $2,800 pre-pandemic to $16,000, if a booking can be found.
Property and construction news
Disputes | The average value of construction disputes has increased by 117% in the last year, according to Arcadis. Time taken to resolve disputes is unchanged at 10 months.
HS2 Phase 2a has begun the process for a design and delivery partner for Phase 2a between the West Midlands and Crewe which is being built earlier than planned. It involves two tunnels, 26 cuttings, 17 viaducts, and 65 bridges, and will create in excess of 5,000 jobs.
HS2 costs | The cost of HS2 has risen by £1.7bn in the last year, with temporary suspensions and social distancing reportedly to blame.
Pedestrianisation | Oxford Circus will become two pedestrianised areas, prioritising access to the tube station and to pedestrians. The plans will be carried out in phases with the car-free areas to be finished by the end of 2021.
Output rebound | The CBI forecasts consumer spending will drive 70% of growth in 2022 and claims that output in the UK will recover to pre-pandemic levels by the end of this year – a year faster than previously expected.
Port funding | The Port of Dover will take legal action against a decision by the government not to fund a £33.5m project to double immigration processing capacity at Dover. The port applied for funds from the £200m Port Infrastructure Fund. The fund was inundated with proposals in excess of £400m.
Exports | Food and drink sales to the EU nearly halved in the first quarter of 2021. Trade groups say that they are struggling with costs, paperwork, and delays.
Retail sales fell in May (but still remained relatively high) as people opted to eat out instead as rules on indoor dining were relaxed.
Negative yields | 5-year bond yields in Greece have become negative for the first time, meaning that investors are paying to lend money to Greece. The European Central Bank’s decision not to reduce levels of asset purchases has encouraged investors to riskier debt.
Helicopter money | In August, Hong Kong will start handing our HK$5,000 (£463) vouchers to encourage consumption. Whilst the recession ended in Q1, retail spending remains weak.
Hong Kong housing | Despite low retail spending, increasing emigration, and political turmoil, house prices in Hong Kong are nearing an all-time high, fuelled by low interest rates.
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
The economic picture is still a mix of positive and negatives. Output is growing and the UK economy is recovering faster than previously thought, but this is putting pressure on resources. However, we should question how likely these pressures are to endure, especially in light of the fall in pricing of American timber. This shows how volatile a lot of indicators are currently, suggesting that the recovery is not a certainty yet and demand is fickle.
This volatility could become more important and pronounced when government support is reduced over the coming months, and companies making use of the furlough scheme have to increase their contributions from next month. Changes to the financial security of firms and individuals could change demand and spending patterns.
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.