Economic Week In Review | Issue 295 | 31 August 2021
Materials and commodities
Bricks | The rate of order cancellations at brick suppliers has fallen, exacerbating supply problems. Brick producer Wienerberger wrote to customers explaining that the average order schedule cancellation is usually in excess of 24%, but this has fallen to just 6%.
Green glass | Pilkington has produced glass using hydrogen power at its St Helens facility. The successful trial could help to significantly reduce overall carbon emissions.
Concrete | Creagh Concrete sent details of 15% price increases across a range of concrete products which will come into effect on 1st September. The increases will also affect fixed price contracts.
CLC guidance | The CLC has issued updated guidance on product availability which states that the overall situation has not changed substantially despite some temporary easing. It highlighted that haulage was a major concern with regional transport a particular issue.
Product marking | Following on from Brexit, CE safety markings were due to transition to the United Kingdom Conformity Assessed (UKCA) mark at the beginning of 2022. After concerns that the industry was not ready for the change, the transition has been delayed until 2023.
UK construction and property news
Retail reinvention | 83% of department stores in the UK have closed in the last five years, with just 79 stores remaining compared to 567 five years ago, with 237 still vacant, as reported by CoStar Group for the BBC.
VAT repayments | Construction Enquirer reported that changes to VAT under the domestic reverse charge scheme are affecting sub-contractors’ cashflow as it takes too long to reclaim VAT from HMRC.
Material issues | The latest survey by the Civil Engineering Contractors Association showed that 73% of companies were experiencing supply problems, up from 29% at the beginning of the year. Nearly 25% of firms reported problems with plant availability.
Net Zero | Manchester is considering adopting a net zero carbon new build policy by 2023 when it produces its new local plan.
Banks as landlords | Housing’s resilience through the pandemic has encouraged large investors into the sector. Lloyds Banking Group is the latest investor and aims to become a landlord to 50,000 homes over the next ten years. Investment into Build-to-Rent schemes reached a peak of £3.5bn last year.
Changing work | In the US QR codes are increasingly replacing service staff as the pandemic and social distancing encourages automation and use of technology.
Inflation in Poland reached a two-decade high of 5.4%.
Germany | Unemployment has fallen to a post-Covid low of 5.5%, after peaking at 6.4% in June 2020, whilst inflation has hit a 13-year high of 3.4%.
France | Inflation hit its highest level in nearly three years, driven by food and fuel prices, and the end of the sale season. Inflation reached 2.4%, breaching the 2% target for the first time since 2018.
US inflation reached 5.4% in July. Some have pointed to more generous fiscal stimulus and earlier reopening seen in America, whilst other analysts have suggested that different purchasing patterns have caused different inflation results across countries. In the US used cars and housing costs make up a larger part of the inflation calculation than in Europe.
South Africa unemployment | 7.8 million people are out of work in South Africa, the equivalent to 34.4% of the adult population in Q2 (44.4% when including those not actively seeking employment). the high figure is a product of several factors: 20% of the country’s GDP is made up of retail and production industries, a very low vaccination rate (2% of the population), economic mismanagement, and riots following the imprisonment of former president Jacob Zuma.
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
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Brent Oil $/barrel
Inflation and unemployment data from around the world shows how crucial it is to understand the drivers that sit behind information so that we avoid making unhelpful comparisons.
Over the past few weeks we’ve reported on a lot of clean energy or low carbon solutions coming through in construction. Following a year of variable output and rising prices, it is encouraging to see that companies, public bodies, and consumers are still committed to more sustainable futures.
A key ongoing concern is the availability of materials, exacerbated by the shortage of HGV drivers. Whilst immigration rules are in the spotlight, we should perhaps examine the sector a little more closely to see if there are other reasons why the UK’s HGV sector is particularly reliant on EU workers and why employment numbers can be so volatile despite the economy’s clear reliance on the role.
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