Signs of optimism

Economic Week In Review | Issue 270 8 March 2021

Property and construction news

  • Commercial work | Output improved in February, according to IHS Markit, pushing construction PMI up to 53.3 from 49.2 in January.
  • Plant shortages | Bottlenecks are appearing in the supply of construction plant, particularly 1-3t excavators and small dumpers, with manufacturers now reporting delivery dates in 2022. Demand is increasing rapidly in the North and Midlands following government stimulus but supply is still constrained due to Covid production cuts and problems sourcing steel.
  • Office values | According to researchers at asset managers DWS, London’s office market could see a 25% increase over the next five years. The rate of increase is faster than other European capitals, but London is starting from a lower baseline due to previous Brexit uncertainty.
  • London Plan | After being formally accepted in February, the new London Plan was published, targeting 52,285 new homes a year.
  • London HQ | Social media firm TikTok has signed a 15-year lease for an 88,500sqft space in Farringdon.
  • Lloyds Bank has announced plans to become a private landlord in an effort to boost revenue in an era of low-interest rates. It will buy existing building stock and plans to have its first tenants by the end of the year.
  • MMC study | Homes England has launched a study to collect data on 1,800 homes on eight sites over the next six years to provide “long term, in-depth and verifiable data so that informed decisions about emerging construction technologies can be made”.

Reasons to be cheerful

Our latest Market Report sets out our current views on construction pricing and the cocktail of drivers that will influence it over the coming period, as the UK and its construction industry anticipates brighter times ahead, albeit with some headwinds that will need to be negotiated.
Read it on our website [here].

Budget 2021

See our review of the Budget and what it means for property and construction on our website [here].

Materials, stocks, and currencies

  • Oil rebound | Oil prices rose to above $70/barrel for the first time in over a year as the vaccine rollout in developed nations increases hopes that demand will recover.
  • Stock markets | All of our tracked markets are now showing annual growth because of the substantial fall experienced at the end of February, into March last year.

UK news

  • Air pollution | EU courts found that the UK has broken air pollution limits for a decade and levels of nitrogen dioxide (primarily from diesel vehicles) are illegally high in 75% of urban areas.
  • State aid | The UK has scrapped the EU cap on Covid grants so that it can triple the cap and support larger companies.
  • Consumer demand | Travel agents Tui reported that summer bookings increased 500% overnight and Easyjet reported a 337% weekly rise as the UK government published its road map out of lockdown.
  • UK economy | According to The Times, the ONS will publish data this week stating that the UK economy contracted by nearly 5% in January. GDP data will be released on Friday.

Global news

  • Growth in China | China is to target at least 6% growth in 2021, hailing recovery from an “extraordinary” year.
  • US jobs | The unemployment rate and jobless figures changed very little in the month at 6.2% and 10.0 million, but are much lower than their April 2020 highs, and above pre-pandemic levels of 3.5% and 5.7 million. Job growth in the USA was faster than expected in February.
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 %
Annual %
FTSE 100 6,630.52 2.27 2.60
FTSE 250 21,961.31 0.24 18.96
Nikkei 28,864.32 -0.35 39.11
CSI 300 5,262.80 -1.39 27.17
S&P 500 3,841.94 0.81 29.26
Nasdaq 12,920.15 -2.06 50.66
CAC 40 5,782.65 1.39 12.52
Dax 13,920.69 0.97 20.61
$ per £ 1.3811 -0.98 6.16
€ per £ 1.1593 0.55 0.84
Gold £/oz 1,228.65 -1.39 -4.22
Brent Oil $/barrel 69.36 4.88 53.21

Weekly Summary

Whilst the Budget did not present an entirely positive view of the market, it showed that there are some reasons to be cheerful and that (assuming a continued successful vaccine roll out) we could see confidence return to the economy. There are already some signs of this such as holiday bookings and the oil market but we would want to see a continuation of this trend and its underpinning of returning confidence, before we can assess what it means for the real estate sector.

For construction, it is encouraging to see that the government appears to be standing by previous announcements to stimulate innovation and productivity. Recent policies and guidance such as the super deduction and the Construction Playbook will help enable this, as well as initiatives such as the MMC study. These positives could help the industry improve in the longer term.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst