Goodbye to all that?

Economic Week In Review | Issue 310 | 13 December 2021

Materials and commodities

  • Tariffs | Britain’s trade minister has warned that tariffs could be imposed on more US goods over continued debates over the US’ refusal to remove Trump-era tariffs on British aluminium and steel.
  • Shipping | Slow turnaround times at Felixstowe have encouraged many lines to divert ships away from the port. IHS Markit data shows that the port, which handles 36% of containers in the UK, is the worst performer amongst the world’s largest ports (barring Los Angeles). According to research by Drewry Maritime Advisors, UK ports are on course for their worst year of throughput since 1983, after lower North Sea oil production and reduced cargo volumes post-Brexit.
  • Mineral reserves | The Mineral Products Association’s latest annual survey shows that mineral reserves are at an all-time low as replenishment rates continue to fall behind sales volumes. The report comments on the backdrop of decreasing aggregate sales. 2019 and 2020 were 4.8% and 8.8% lower than 2018, although demand rebounded quickly in the second half of 2021.

UK construction and property news

  • Labour | Data from Hudson Contract shows that site labour rates in London have reached an all-time high, increasing to £962 a week, up 6.1% annually. In the East Midlands, rates have increased 9% annually to £1,006/week.
  • Workforce | The Construction Products Association re-voiced concerns over the UK’s ageing construction workforce, citing new figures showing that over the past year there has been an exodus of 45-55 year-olds from the sector.
  • Central London offices investment reached £2.2bn since the beginning of October, according to Knight Frank. US investors were responsible for almost half of the deals, followed by investors from the UK (29% of deals), and those from South East Asia (11%).
  • Building safety | The chief inspector of buildings, Peter Baker, has told high-rise designers to act now in preparedness for changes once the Building Safety Bill passes into law. The Bill is currently making its way through parliament.
  • Construction output fell in October according to new stats from the ONS. Output dropped 1.8%, the largest monthly fall since April 2020. New work decreased by 2.8%, and commercial work remains nearly 27% smaller than pre-covid. Procurement body, SCAPE commented that October saw the peak of the fuel crisis, port delays, and a shortage of HGV drivers.

UK economy

  • Economic growth in the UK stalled before news of the Omicron variant hit. According to the ONS, GDP grew just 0.1% in October. Economists had expected growth of 0.4%, a slight dip from September’s 0.6%. The economy is still 0.5% smaller than pre-Covid levels.
  • Plan B | The government announced a Covid Plan B to tackle the spread of the new variant in the run-up to Christmas. Despite asking for people to work from home where possible, the government ruled out any further support for businesses that will see lower income as workers stay at home.
  • Employment | In its latest survey of owner-managed businesses, accountancy firm Moore UK has found that 33% of firms are planning to make redundancies over the next six months. Within small firms, the figure is higher at 45% as furlough has been removed and many struggle to repay debts built up over the pandemic.
  • UK factories are increasing prices as the rate of general inflation increases. Producers have struggled under rising commodity prices and the shortage of labour increasing the cost of employment.

Global economy

  • Evergrande defaults | Following on from concerns earlier in the year, Chinese developer, with over $300bn of debt, Evergrande has defaulted on its latest $1.2bn debt obligation.
  • Inflation in the US is increasing at its fastest pace since 1982 after CPI rose 6.1% in November. Fuel, housing, food, and new/used vehicles all saw price increases.
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 7,291.78 2.38 11.38
FTSE 250 22,927.71 1.24 16.85
Nikkei 28,437.77 1.46 6.70
CSI 300 5,055.12 3.14 3.38
S&P 500 4,712.02 3.82 28.62
Nasdaq 15,630.60 3.61 26.28
CAC 40 6,991.68 3.34 26.95
Dax 15,623.31 2.99 19.13
$ per £ 1.3262 0.23 0.49
€ per £ 1.1722 0.17 7.58
Gold £/oz 1,343.89 -0.26 -3.42
Brent Oil $/barrel 75.15 7.54 50.39

Weekly Summary

Whilst there are still issues with escalating costs, supply of materials seems to be easing, only to be replaced with increasing concerns over all facets of the labour market, from the level of supply, experience, and cost.

The New Year will see these challenges set against a background of increasing investment in real estate, and tight cashflows of businesses where have taken on more debt over the pandemic and have seen margins squeezed due to a lack of market confidence and rising prices. The latest round of Covid restrictions will no doubt add to these concerns.

Traditionally, unless something significant of note happens over the course of the next seven days (as it did with Brexit in 2020), this will be the last Economic Week in Review of 2021.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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