Issue 276 19 April 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 276 19 April 2021

Property and construction news

Wages | Wages for self-employed trades returned to pre-Covid levels in March. Weekly pay rose 3.7% according to Hudson Contract, although this growth is not uniform across the UK. Wages in the North East have shown 10.5% annual growth whilst wages in Yorkshire remain 8.3% lower than a year ago
Construction output increased 1.6% overall but remains 4.3% lower than a year ago.
Hotel demand | Domestic tourism is expected to drive a recovery in the UK’s hotel market, but demand is not expected to return to pre-pandemic levels until 2024. UK hotel deals in 2020 were 60% lower annually but CBRE suggests that Q1 2021 was active.
Tall Buildings | The latest survey by New London Architecture reports that only 24 tall buildings started construction in 2020, compares with 44 in 2019. The number of new planning applications fell by 27.1% and 73% of these were made in the second half of the year, after the main pandemic shock.
Houseprices and homeworking | The average UK home asking price rose by nearly £7,000 according to Rightmove as families seek larger homes to cater for homeworking. A study by Deloitte found that almost a quarter of people are keen to permanently work at home, however, 28% were desperate to return to the office.

Materials and commodities

Aggregates terminal | Tarmac has signed a 25-year partnership with the Port of Tilbury in Essex to construct a purpose-built aggregate processing and manufacturing facility.
Iron Ore | Imports into China grew to a five-month high as demand remains strong despite rising costs. Efforts to curb emissions from China’s steel sector have worked to boost profitability at some mills.
Aluminium prices reached a near 10-year high as trade data from China buoyed demand, in addition to global greening and infrastructure policies, and supply concerns.
Liberty Steel missed deadlines to file accounts at some of its biggest businesses in Britain and missed interest payments on some government-backed loans. Significant questions have been raised recently over the company’s financing methods.

UK news

Jobs | The number of online job adverts in the UK has returned to levels seen just before the first lockdown according to Adzuna jobs website published by the ONS.
Missing workers | UK pubs and restaurants have warned of staff shortages as thousands of workers left the industry and either moved to another less affected industry or returned to their home countries. In the most recent lockdown, 2 million hospitality workers were on furlough.

Global news

European market | Real estate investment volumes in Europe were 27% smaller in 2020 than in 2019 according to data from Real Capital Economics. Germany was the most active country with €66.7bn of transactions, followed by €50.3bn in the UK. Analysts speculate that the UK may push ahead of Germany due to vaccine success and more Brexit certainty.
Global savings | According to credit ratings agency Moody’s, people around the world have amassed an extra $5.4tn of savings since the pandemic began. Many analysts believe that this untapped spending, combined with increased consumer confidence will allow economies to recover.

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	7,019.53	1.50	21.30
FTSE 250	22,522.18	1.22	42.01
Nikkei	29,683.37	-0.28	49.18
CSI 300	4,966.18	-1.37	29.34
S&P 500	4,185.47	1.37	45.60
Nasdaq	14,052.34	1.09	62.45
CAC 40	6,287.07	1.91	39.74
Dax	15,459.75	1.48	45.49
$ per £	1.3826	0.67	10.60
€ per £	1.1542	0.14	0.48
Gold £/oz	1,284.17	0.94	-4.61
Brent Oil $/barrel	66.77	6.07	137.78

Weekly Summary

The further opening up of economies and public spending (particularly on green infrastructure projects) should be welcomed, however, it is creating additional pressure on an already constrained commodities market. As construction output increases, we are closely watching to see when this pressure materialises in construction pricing.

To hear construction’s warnings over missing workers echoed in other sectors is also concerning, and another point to monitor, particularly with the news that self-employed construction wages are increasing, albeit to unequal levels across the UK. As more industries have to compete over a smaller labour pool, hopefully the wide adoption of the CLC’s plan for skills can put construction on the front foot to deal with any forthcoming shortages.