Issue 282 | 1 June 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 282 | 1 June 2021

Materials and commodities

Cement | Hanson has cut allocation of bagged cement to customers and is looking to increase capacity by importing cement, although it is doubtful that this would remedy the immediate effects of global demand and shortage of shipping. Hanson Packed Products Director, Andrew Simpson, said in a note that Hanson was also being affected by a global shortage of packaging and pallet availability.
Softwood | Roofing contractors have warned that supply issues are increasing the cost of materials.
Iron ore prices have recovered all recent losses and are nearing $200/tonne
Brent oil | Ahead of a decision by Opec+, Brent oil has increased above $70.
Steel in Europe | Steel manufacturers in Europe have asked the European Commission to ensure a level playing field for domestic producers as it plans to publish plans for a carbon border tax. Eurofer has asked the EU not to reduce Emissions Trading System allowances for the industry too quickly as such a move will rapidly increase costs.

Property and construction news

Green bank loans | Wilmot Dixon has secured a “first-of-its-kind funding for the sector” according to lender HSBC who led the deal for a sustainability-linked £50m credit facility. Interest rates will increase or decrease depending on the company’s sustainability performance.
Infrastructure work | An extra £401m funding for upgrades and new stations on the Transpennine route has been announced by the Government.
Fire systems in schools | Insurer Zurich Municipal has said that new proposals for the Department for Education are “ill thought through”. The proposals suggest that fire sprinklers will only be mandatory in schools taller than 11m, special needs schools and boarding schools.
Eviction ban | The eviction ban which was introduced during the pandemic was lifted today. Research by the Joseph Rowntree Foundation has shown that 400,000 renters have been served an eviction notice or warned that they might be.

UK news

UK trade | China has overtaken Germany as the UK’s top import market for the first time. Goods imported from China increased 66% between the start of 2018 and Q1 2021. Imports from Germany fell 25% over the same period.
Exports | Analysis by the University of Sussex’s Trade Policy Observatory has shown that between £2.5bn and £3.5bn of British exports (around 27% of trade) to the EU were subject to tariffs in the first three months of 2021 despite the free trade deal.
Energy supply | Initial results from trial studies could help the UK bring nuclear fusion power to the grid.
Services exports | According to analysts at Aston University in Birmingham, Brexit has reduced the UK’s export of services by £110bn over a four-year period between 2016 and 2021.

Global news

Eurozone inflation | Consumer price inflation moved to 2% in May, passing the European Central Bank’s target of close to, but below, 2% for the first time since 2018. Policy makers do not expect the rate to last for long, but to be a temporary surge. Core inflation is still low at 0.9%.
Debt in China | Signs of credit stress are showing in China as Covid-support measures are eased. Corporate bonds currently stand at $1.3tn, which is payable over the next 12 months (that is 30% more than in the US and, 63% more than in Europe). According to Bloomberg, borrowers are defaulting at a record-breaking pace.

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	7,022.61	0.06	15.57
FTSE 250	22,683.95	1.27	33.10
Nikkei	29,149.41	2.94	33.24
CSI 300	5,321.09	3.64	37.60
S&P 500	4,204.11	1.16	38.10
Nasdaq	13,738.00	1.91	44.76
CAC 40	6,484.11	1.53	38.09
Dax	15,519.98	0.53	33.94
$ per £	1.4188	0.22	15.16
€ per £	1.1635	0.08	4.90
Gold £/oz	1,341.43	0.89	-4.24
Brent Oil $/barrel	69.63	4.80	84.89

Weekly Summary

The effects of Brexit and Covid are a little better understood, though the extent to which impacts are permanent remain unclear. However, risks to future output such as a return to inflation (in all parts of the economy) alongside high and increasing debt burdens are important bumps along the road that we cannot lose sight of.

As construction materials and projects continue to make headlines in the general press, we need to ensure that conversations are explicit about the timescales being compared so we can better understand the changes and therefore how to mitigate them. For example, the figures in the above table show large annual changes, but this is in part due to the depth of last year’s low. This is particularly apparent in the figures for oil which have recently shown annual increases of more than 100%.