Issue 268 22 February 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 268 22 February 2021

Property and construction news

International investment | Dutch investor APG is one of the world’s largest pension funds and is to invest 75% of a £500m student accommodation scheme in a JV with Scape. It will look to invest in London, Manchester, Birmingham, and Leeds. In the last year, ten new investors entered the student accommodation market, up from an average of three to four, according to Savills.
House prices in the UK rose at the fastest rate since 2014, according to the ONS. The 8.5% average increase was fuelled by the stamp duty holiday and changes to lifestyles, post-pandemic. Data also shows that the number of buy-to-let purchases have been falling. From 85,900 in 2015, to 52,800 in 2019, to 42,000 in 2020.

Materials, stocks, and currencies

Pound highs | The pound reached $1.40 for the first time since 2018, rising 2.4% against the dollar since the beginning of the year.
Iron Ore prices increased to the highest since 2011 on the first day of trading after the Chinese New Year. Benchmark 62% Fe fines were up nearly 9% on an annual basis. Responding to lockdowns that limited travel, China’s factories didn’t slow as much as usual during the New Year holiday.
Copper prices posted a nine-year high on Thursday, also after the Lunar New Year. At the London Metal Exchange, it is valued 87% higher than its pandemic low.
Oil | Winter storm Uri has reduced the Unites States’ refining capacity by nearly 6 million barrels per day.

UK news

Consumer inflation rose from 0.6% in December to 0.7%. The key inflation sectors were household goods and food/alcohol, while clothing and footwear prices saw the largest fall in pricing.
Retail sales fell 8.2% in January when compared to December. As the new lockdown was introduced in January, it is unsurprising that online sales hit a record high, accounting for a third of total spending.
Consumer confidence has risen according to the latest survey by GfK. The poll reading rose 5 points to an 11 month high of -23. Opinions have been boosted by the vaccine rollout.
Employment | In a landmark case, the Supreme Court has ruled that Uber drivers should be classed as employees and should be entitled to minimum wage and holiday pay. The ruling is expected to have consequences for the wider ‘gig economy’.
Employment prospects | According to HR body, the CIPD, more than half of employers in the UK plan to recruit staff in the next three months. Sectors with the strongest intentions to hire were healthcare, finance and insurance, education, and IT.
Brexit friction | IHS Markit’s latest composite PMI for the UK suggests that delayed supply chains and friction at UK borders have pushed UK manufacturing to its weakest level in nine months, with half of all companies reporting lower exports. The overall PMI level stood at 49.8 in February, above economists’ predictions of 42.6 but below the crucial 50.0 marker.

Global news

Global service sector | Lockdowns are continuing to affect service sectors around the world according to IHS Markit. Whilst the US and Australia have seen strong growth, Japan and Europe remain depressed. At 44.6 the UK’s average services PMI reading is the lowest of major economies.

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	6,624.02	0.52	-10.53
FTSE 250	21,035.96	-0.01	-3.42
Nikkei	30,017.92	1.69	28.35
CSI 300	5,778.84	-0.50	39.27
S&P 500	3,906.71	-0.71	17.05
Nasdaq	13,874.46	-1.57	44.88
CAC 40	5,773.55	1.23	-4.25
Dax	13,993.23	-0.40	3.05
$ per £	1.4022	1.20	8.14
€ per £	1.1554	1.13	-3.26
Gold £/oz	1,273.85	-3.22	0.47
Brent Oil $/barrel	62.91	0.77	7.54

Weekly Summary

Once again it feels like the industry is waiting. Today, the Prime Minister will announce his roadmap out of lockdown, and next week the Chancellor will present his Budget to the House of Commons.
Both of these key pieces of information will help give an indication of demand for the year and how output will be driven. The Budget, in particular, will give vital updates on support currently available to businesses and people, such as furlough schemes and Stamp Duty, in addition to news on reverse charge VAT and plans to repay the Pandemic Deficit.
Meanwhile, it seems that there has been no let-up in the pressure on commodity prices, although a recovering pound will help to offset some of these increases.

To lookout for this week

Tomorrow, new data on employment will be released, including unemployment figures, the number of non-UK born workers currently working in the UK, and employment figures by industry.