What's on the horizon?

Economic Week In Review | Issue 297 | 13 September 2021

Materials and commodities

  • Timber | The Timber Trade Federation reported a surge in imported timber levels with 1.01 million cubic metres imported in June. Imports in the year to date have been at the highest level since 2007. Monthly timber imports rarely exceed 1 million m3 but have done so in five of the last nine months. Shortages fuelled by high demand are expected to continue in the short to medium term.
  • Graphene resurfacing | National Highways is carrying out the world’s first resurfacing works using graphene additives. It is hoped that the material will offer durability improvements. Graphene research was included in the then Chancellor George Osborne’s Budget in 2014, hailing it as a “Great British Discovery”.
  • Cement strike | Lorry drivers for Hanson are to hold a strike ballot over pay, having rejected a 2.5% pay increase this year. Unite added that “the workforce is deeply unhappy about the high handed management style and a marked lack of dignity at work”. The ballot takes place between 10th and 23rd September and could affect cement supply levels if the strike goes ahead.
  •  Concrete products | Marshalls has started construction on a new £20m block plant in St Ives, Cambridgeshire after order levels showed a strong rebound. The company aims to create “more opportunities to source products from mainland Britain with less reliance on imports.”
  • Iron ore | ArcelorMittal is to triple iron ore production in Liberia. Annual production will increase to 15-million tonnes during the first phase of expansion and could rise as high as 30-million tonnes. Meanwhile, iron ore futures prices fell for a second week as demand from China fell because producers are monitoring energy consumption in an effort to reduce pollution.

UK construction and property news

  • Building company finances | A survey by The Construction Index of company finances found that financial health was falling before the pandemic, with the aggregate income of the Construction Index Top 100 down 4.8% when compared to the previous year’s accounts. Revenue fell for 53 of the top 100 whilst any increases in income were largely seen in smaller firms.
  • House prices have increased to record levels but the rate of growth has slowed. Halifax’s tracker shows the average home increased to £262,952, rising 7.1% in the year to August. Figures from Nationwide showed more of an increase, reporting an 11% annual rise. Many expect growth to slow as the Stamp Duty holiday comes to a close at the end of this month.
  • Infrastructure | The updated Infrastructure Pipeline reveals a record planned £650bn of public and private investment over the next decade. The Infrastructure and Projects Authority estimates that this will require 425,000 individuals a year, to deliver the £200bn Build Back Better plans over the next four years.
  • HS2 workforce | Phase One of HS2 is supporting over 20,000 construction jobs with contracts already awarded to 2,200 businesses.
  • Office occupancy levels have reached a post-Covid high of 87% according to data from Metrikus. It suggests that a “three-on, two-off” week is the current preferred modus operandi with Mondays and Fridays being the least populated days.
  • Construction output | The measure of all work is 1.6% down, driven by a fall in repair and maintenance. Analysis suggests that the fall is due to material shortages and increasing labour costs. Private industrial and infrastructure output grew substantially, whilst private commercial remains 20% below pre-Covid levels.

UK economy

  • Devolution | Cumbria, North Yorkshire, and East Riding of Yorkshire may soon become new mayoralties according to the communities secretary Robert Jenrick.
  • Brexit | Marks and Spencer is to scale back its French operations following border restrictions causing problems supplying French stores.
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 7,029.20 -1.53 16.53
FTSE 250 23,799.94 -1.63 35.57
Nikkei 30,381.84 4.30 29.80
CSI 300 5,013.52 3.52 8.35
S&P 500 4,458.58 -1.69 33.45
Nasdaq 15,115.49 -1.61 39.27
CAC 40 6,663.77 -0.39 32.37
Dax 15,609.81 -1.09 18.23
$ per £ 1.3845 -0.13 8.28
€ per £ 1.1713 0.41 8.39
Gold £/oz 1,292.73 -1.99 -14.74
Brent Oil $/barrel 72.92 0.43 83.08

Weekly Summary

Construction news is becoming increasingly positive, with a real commitment to infrastructure, and new technologies and materials yet we cannot lose sight of the fact that there is a range of recovery speeds (and challenges) across sectors.

Materials pressures are still apparent, but mitigation strategies such as new production facilities and forward ordering seem to be reducing some bottlenecks. A large question mark remains over the resolution of the shortage of HGV drivers (despite recent relaxations to tests and working conditions) and the impact this will have on construction, especially as the retail sector gears up for Christmas. However, we are frequently hearing reinforcement of our view that labour pressures are emerging as materials pressures begin to ease

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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