Examining labour gaps

Economic Week In Review | Issue 296 | 6 September 2021

Materials and commodities

  • Oil | OPEC boosted production of crude oil by 290,000 barrels a day with Saudi Arabia and Iraq increasing the most. However, the group is still producing 10% below its usual output with Angola and Nigeria suffering deteriorating capacity and technical issues. Oil hubs along the US Gulf Coast have closed due to Hurricane Ida.
  • BIS Materials | The latest survey by the Department for Business, Energy & Industrial Strategy shows that material prices, particularly imported plywood, structural steel, and imported planed or sawn wood, have increased over the last year. However, the price of screws has fallen 14%.

UK construction and property news

  • Digital roads | National Highways (Previously Highways England) has detailed plans to develop digital twins of its network to predict maintenance issues as part of its “digital revolution”.
  • JCB demand | JCB is to create 100 welding jobs to meet demand for its products. Its products are largely sold out until next year with historically high interest levels. The number of welders in the UK has fallen in the last five years, but JCB has created apprenticeships and training programmes, training 70 apprentices in the last three years.
  • Skills shortage | The latest Building Engineering Business Survey reports that materials and labour shortages are expected to worsen while turnover is forecast to increase towards the end of the year. Respondents said that skills shortages have pushed up labour costs, forcing 26% of participants to hire fewer workers in Q3 than in Q2.
  • Tax | The Civil Engineering Contractors Association, along with six other industry trade bodies, wrote to the Chancellor of the Exchequer asking for the eligibility criteria for the super deduction allowance to include short-term hire and leasing.

UK economy

  • Retail | Holidaying in the UK and a wider return to the office have driven UK footfall. It increased 10% from July, after three months of no growth, according to the British Retail Consortium. However, footfall was still 18% lower than the same period in 2019.
  • Wider skills shortage | The Confederation of British Industry also warned that labour supply problems in the general economy could last up to two years and that furlough ending is not a panacea that will magically fill jobs.

Global economy

  • Factory output | Unfulfilled orders in Europe rose to record levels in August according to IHS Markit. In Asia, supply problems are being compounded by Covid-19 outbreaks which have forced factories to close or reduce production. PMI readings in Indonesia, Vietnam, Thailand, Philippines, and Malaysia have all fallen below 50.0.
  • Services PMI in China fell to 46.7 in August (54.9 in July), the lowest since April 2020. Delta-variant Covid outbreaks pushed authorities to start mass testing and travel restrictions which affected catering, transport, accommodation, and entertainment industries. Caixin Insight Group’s senior economist was quoted as saying “Service costs were still under great pressure amid elevated labour and transportation costs amid the Covid-19 resurgence”.
  • US jobs growth | 750,000 new jobs were added in August, unemployment fell from 5.4% to 5.2% and average earnings grew 0.3%. This growth is lower than has been seen in recent months but is considered enough to sustain economic expansion. Recent increases in Covid-19 cases, driven by the Delta variant, have reduced demand for travel and entertainment.
  • US Construction | Construction employment in the US is still below pre-pandemic levels in 36 states. The Associated General Contractors of America’s economist suggests that “the fast-spreading Covid-19 delta variant may make it harder for employees eligible to work on restricted sites and may also depress demand”. The programme of federal infrastructure investment is expected to boost demand.
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 7,138.35 -0.14 23.09
FTSE 250 24,194.61 0.56 39.42
Nikkei 29,128.11 5.38 25.71
CSI 300 4,843.06 0.33 1.53
S&P 500 4,535.43 0.58 32.35
Nasdaq 15,363.52 1.55 35.80
CAC 40 6,689.99 0.12 34.74
Dax 15,781.20 -0.45 22.88
$ per £ 1.3863 0.70 4.79
€ per £ 1.1665 -0.06 4.18
Gold £/oz 1,318.93 -0.17 -9.45
Brent Oil $/barrel 72.61 -0.12 70.21

Weekly Summary

International news and data show that we are not through the Covid-19 crisis yet and how different strategies can affect economic recovery. No doubt the UK construction sector will be looking for lessons learned from the US model.

Skills shortages have become particularly prominent in the news both in construction and the wider economy. There is an increasing focus on working practices, training, and wages in roles that were maybe previously not considered as central to the economy.

With reduced immigration and a fairly low unemployment level in the UK, it is important to consider the attractiveness of these roles and what innovation could take place which could reduce reliance on people.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

Related reviews

Website &AGENCY