What do we know?

Economic Week In Review | Issue 299 | 27 September 2021

Materials and commodities

  • Cargo ships | There is a record number of ships waiting outside the port in Los Angeles following a recent import boom. Last week 73 ships were waiting to unload. The LA-Long Beach port complex is the ninth-largest in the world, moving 40% of imports to the US and 30% of exports, largely to and from Asia. Large queues of over 240 ships have also been reported outside of ports in China due to Covid, large export volumes, and Typhoon Chanthu.
  • Timber | The port of King’s Lynn has seen timber imports double in the last year, with 220,000m3 passing through the port by the end of the year.
  • EU carbon permits reached record prices of €62.75/tonne over concerns that the natural-gas shortage will increase demand for coal-fired power over winter.

UK construction and property news

  • Planning applications | The number of schemes granted planning permission in England increased 9% in the year to June 2021. Nearly 2,000 applications for commercial schemes were submitted, an increase of 19%.
  • Tower cranes | HS2’s Euston station will require 20 tower cranes to be installed over three to five years, and at its peak, will have 3,000 people on site.
  • Construction wages | Data from Hudson Contract shows that skilled labour costs rose 2.8% in August, a 5.8% annual increase. Labour in the East Midlands rose to an all-time high of £1,022 per week.

UK economy

  • Inflation warning | The Bank of England has warned that CPI could breach 4% at the end of the year because of the energy price shock and could “remain above 4% into 2022 Q2”.
  • Consumer confidence has fallen to a five-month low of -13 in September as people are more worried about personal finances and the economy more generally.
  • Private sector output grew at its weakest rate since Covid restrictions were rolled back. The latest survey by IHS Markit / CIPS also found that input costs rose at the fastest pace since the late 1990s.
  • Supply chain disruption | A quarter of British shoppers reported stock gaps in supermarkets according to an ONS study, saying that they had not been able to buy non-essential food items and 40% reported less variety. The UK’s shortage of HGV drivers is now estimated to have reached over 100,000 and affected fuel deliveries this week, with BP closing up to 100 forecourts. Ministers have not ruled out relaxing immigration rules, as Transport Secretary Grant Shapps commented that the government will “move heaven and earth” to tackle the problem.
  • US trade deal | According to political commentators, hopes of a UK/US trade deal “have all but evaporated” and that there is “little prospect of progress towards a one-to-one deal” before the next general election in the UK (2024) as the Biden administration “focusses on other priorities”.
  • Green gilts | The government’s inaugural sale of 12-year green gilts saw £100 billion of bids, a record for a public bond sale in the UK. The sale raised £10 billion at 0.87% interest and must be spent on environmental projects.

Global news

  • German house prices increased at the fastest pace on record as people working from home look for more space. Prices increased 10.9% between Q2 2020 and Q2 2021.
  • Canadian office vacancies reached their highest level since 1994. The national vacancy rate is 15.7%. The rate is uneven between cities: 30.1% in Calgary, 13.7% in Toronto, according to CBRE.
  • Global jobs | Studies show that despite jobs support schemes coming to an end around the world, labour shortages will not ease much. Oxford Economics has said that pressures are clearest in the US and lack of staff is holding many businesses back. The key driver at the moment is the variety of attractive jobs offering higher salaries and training, which is making some industries less appealing.
  • German elections | The centre-left Social Democrats won a narrow victory over the party of the outgoing Chancellor Angela Merkel (25.9% versus 24.1%). The Green Party was next with 14.6% of the vote, its highest yet. Prolonged talks to discuss a three-way coalition is expected in order to form a majority government.
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 7,051.48 1.26 20.69
FTSE 250 23,608.79 -0.21 28.52
Nikkei 30,248.81 -0.82 30.36
CSI 300 4,849.43 -0.13 6.11
S&P 500 4,455.48 0.51 35.08
Nasdaq 15,047.70 0.02 37.88
CAC 40 6,638.46 1.04 40.36
Dax 15,531.75 0.27 24.56
$ per £ 1.3680 -0.55 7.67
€ per £ 1.1677 -0.40 6.80
Gold £/oz 1,279.85 0.19 -12.37
Brent Oil $/barrel 78.09 3.65 86.28

Weekly Summary

Opportunities for inflation in the general economy are a cause for concern, but as ever, it is important to understand what is driving annual figures and to remember what was happening at this time in 2020. Leisure was seeing the benefit of Eat Out to Help Out, which artificially deflated prices, the furlough scheme was extended in October, and England was on the verge of another lockdown.
The context in comparisons is still an important tool to use at the moment, especially given the number of indicators that everyone has now become familiar with. Shipping, HGV drivers, and the level of timber imports have all entered general business conversations, but what do we know about the normal highs and lows of these sectors and industries?

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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