Issue 271 15 March 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 271 15 March 2021

Property and construction news

Labour | According to Hudson Contract, there is increased demand for skilled labour on sites which has pushed monthly wage growth up, although wages still show negligible or negative growth on an annual basis.
Skills plan | The CLC published a landmark plan for skills, proposing a Talent View Portal, and a push towards direct employment.
Construction output | New work grew 1.7% in January to near pre-pandemic levels, led by strength in the infrastructure sector.

Materials, stocks, and currencies

Structural steel | Further price increases have been announced, totaling £260/tonne since last July. The steep rise has been blamed on raw material costs, quotas, and scrap availability.
Oil prices have continued to increase as hopes that demand will recover soon, with Brent pushing towards $70. OPEC+ decided to maintain current output cuts.
Copper prices are expected to peak in Q2 2021 according to CRU commodity analysts, as more copper capacity begins to come online. The metal reached a 9.5 year high in February. Worldwide demand for refined copper fell 3.3% last year, demand excluding China fell by 8.8%.
Gilts | Japanese investors are buying UK government bonds at unprecedented levels. Japan’s Ministry of Finance shows that investors bought £5bn of gilts in January. Some analysts have suggested that the move reflects an expectation of a strengthening pound.

UK news

Exports to the EU fell 40.7% (£5.6bn) in January, the largest monthly decline since 1997, exports to non-EU countries grew 1.7%. Imports from the EU fell 28.8% (£6.6bn).
UK GDP fell in January, but less than feared. The economy was 2.9% lower than in December, but economists had expected a fall of nearly 5%. Unusually, construction was the only sector to show growth.
Consumer inflation | Public expectations for inflation over the next twelve months have held at their lowest level in more than four years, sharply contrasting the market view.
Insurance | The Supreme Court has struck down insurers’ appeals against a ruling that they must pay out over Covid-19 on business interruption insurance.
Border checks | Full checks have been postponed by six months, warning that customs and port infrastructure are not ready.
Retail | Chain store closures increased 30% last year, as more than 17,500 stores closed. An average of 48 shops, restaurants, and other hospitality and leisure venues closed permanently every day. The biggest rise in retail vacancies was seen in London.
Jobs market | The Recruitment and Employment Confederation reported that the London jobs market was hit hardest by lockdowns, with a 15% drop in adverts for new roles. Building trades have seen the highest demand.

Global news

US stimulus | President Joe Biden signed a $1.9tn stimulus bill into law. The bill will see stimulus cheques sent out and an extension of federal emergency unemployment benefits.
Europe | The European Central Bank is expected to increase stimulus in response to rising borrowing costs and a faltering economic recovery.
Offices in Europe | According to a CBRE poll of European real estate investors, offices are still a preferred target sector and London is still top of the wish list as certainty around Brexit has restored some confidence.

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	6,761.47	1.97	26.00
FTSE 250	21,506.47	2.60	38.20
Nikkei	29,717.83	2.96	70.49
CSI 300	5,146.38	-2.21	32.12
S&P 500	3,943.34	2.64	45.46
Nasdaq	13,398.67	3.70	70.14
CAC 40	6,046.55	4.56	46.82
Dax	14,502.39	4.18	57.09
$ per £	1.3929	0.81	11.95
€ per £	1.1647	0.47	3.82
Gold £/oz	1,240.51	0.97	-0.45
Brent Oil $/barrel	69.22	-0.22	104.49

Weekly Summary

Most of our tracked indices show positivity and growth for the year, which may be reflective of both improving economic sentiment and an indicator of how weak the markets were a year ago as Covid-19 was becoming a pandemic and OPEC’s oil price war began.

A year later, it does seem that expectations and confidence in the UK market are improving (albeit with some significant headwinds). This view is supported by the Bank of England Governor, Andrew Bailey, who said “I’m now more positive but with a large dose of caution”.

It is positive to see that construction managed to show growth in January as the new national lockdown came into effect, and we hope that a route out of Covid-19 restrictions will allow a more balanced recovery.