Labour : the next hurdle

Economic Week In Review | Issue 330 | 23 May 2022

Materials and commodities

  • Metal prices have fallen following the latest announcements from the US Federal Reserve and increasing coverage of poor economic news from China. Copper prices at the London Metal Exchange are currently 7.5% lower than in May 2021.

UK construction

  • Procurement | The Department for Education will announce changes to school and college procurement at a supply chain summit in Birmingham next month.
  • PFI | United Utilities has been approved by Ofwat to use a “ground-breaking new contract model”, the Direct Procurement for Customers model which requires contractors to bring private finance along with their bids, in a similar way to the previous PFI procurement model.
  • Pay | Under the Construction Industry Joint Council (CIJC) pay agreement, unions launched a 10% pay increase earlier this year but employers have responded with an increase of less than 4%. The unions have warned that without meaningful improvements to pay the skills shortage will likely worsen. Workers protested outside a meeting of the CIJC in London.
  • Construction Skills | Edinburgh City Council has joined up with Skanska and Mitie to launch a construction skills academy that will be fully operational by 2024.
  • Infrastructure workforce | HS2 reached a milestone of supporting 25,000 jobs and 900 new apprentice starts. 61% of its supply chain is made up of SMEs who are seeking stable work in the current economic climate.
  • Output | According to the latest Deloitte Crane Survey, London is expected to experience a surge in office project starts over the next six months, encouraged by pent-up demand and a need for better energy performance. Currently, 2.7 million sqft of space is being demolished with work set to start in September, weighted heavily towards refurbishment.

UK economy

  • Real pay | The high rate of consumer price inflation has intensified the cost of living crisis pushing real wages down nearly 2% on an annual rate, according to the ONS.
  • Inflationary momentum | Huw Pill, the chief economist at the Bank of England has indicated that he supports further increases to interest rates to stop the UK from drifting deeper into “inflationary psychology”.
  • Retail sales have increased despite inflationary pressures, seeing a boost from supermarket alcohol sales, suggesting that leisure patterns are changing. This could hurt the leisure sector which is already fragile following the pandemic.
  • UK investment | The UK is to back a £150m rare earth metal processing plant for use in magnets for electric vehicles and wind turbines, it would help to reduce the UK’s reliance on China.

Innovation

  • Robot pipe inspectors | The Manufacturing Technology Centre has developed “Ratty the Robot” to inspect pipes and tunnels, which it claims could offer cost and efficiency benefits to utility companies, as well as reduce the need for humans to enter hazardous environments. It hopes that one day it will also be able to carry out repairs, reducing the need to dig up roads.
  • Remote working | Bam Nuttall is using Boston Dynamics’ Spot robot along with a laser scanner to collect data and create site records on a remote site in Shetland. The robot can undertake surveying work in harsh weather conditions, on challenging terrain, and in an isolated location. It is being funded by the Department for Digital, Culture, Media & Sport.
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 7,389.98 -0.38 5.30
FTSE 250 19,835.95 -0.43 -11.44
Nikkei 26,739.03 1.18 -5.58
CSI 300 4,077.60 2.23 -20.58
S&P 500 3,901.36 -3.05 -6.12
Nasdaq 11,354.62 -3.82 -15.77
CAC 40 6,285.25 -1.22 -1.58
Dax 13,981.91 -0.33 -9.43
$ per £ 1.2494 2.04 -11.75
€ per £ 1.1828 0.58 1.74
Gold £/oz 1,478.16 0.16 11.17
Brent Oil $/barrel 110.18 -1.98 65.83

Weekly Summary

Skills and labour shortages should be a key focus over the next few months. With input material prices seeming to soften, wage increases could be the main driver of inflation as output and therefore demand increases. We should not assume that offsite manufacture can be the ultimate solution; whilst it removes labour from site, it still requires a number of people to work elsewhere. The industry needs to continue to build on the momentum of the CLC’s Plan for Skills.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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