No room for excuses

Economic Week In Review | Issue 292 | 9 August 2021

Materials and commodities

  • Bricks | Ibstock has warned of 10.47% price increases which will come into effect in November, pointing to “significant supply issues” and “the demand for energy….and fuel prices have naturally moved”, along with haulage issues.
  • Aggregates, asphalt, and concrete | The Mineral Products Association’s latest survey shows consumption of aggregates and asphalt has reached a 12 year high, boosted by demand for bulk infill on major infrastructure projects and a strong roads programme. However, the ready-mixed concrete market remains weak, with just a 1.2% increase between Q1 and Q2, significantly lower than 2019.
  • Wood | Supply chain bottlenecks and increased demand have increased the price of softwood. The Timber Trade Federation has said that the “situation…is without any precedent”. Prices are expected to worsen as Swedish mills pause for maintenance over the summer.
  • Oil prices have risen nearly 60% in the last year, and this has pushed Saudi Arabia’s Aramco’s profits up by nearly 300%. Saudi Arabian oil is one of the easiest and therefore cheapest to extract.

Property and construction news

  • Activity | IHS Markit’s construction PMI fell from its 24-year high in July but still recorded a reading of 58.7, well above the 50.0 marker for no-change. House building was the best performing sector, only just above commercial but all sectors were positive. Buyers reported a near-record decline in subcontractor availability.
  • Payment periods | Data from Build UK on 32 leading contractors showed that nearly a third of major contractors made payments faster than 30 days, reducing concerns that Covid may cause payment delays.
  • Office investment in the South East is the strongest it has been since 2013 according to Knight Frank. Total investment was £1.49bn in Q2, up 49% on Q1 2020. In the first half of 2021, £1.97bn of offices have been sold, a 16-year high.
  • Investment | Real Capital Analytics found that the UK was the most active country for investors across Europe in the first half of 2021, accounting for £26.9bn of deals (£105.8bn overall). However, that is 16% lower than the 2015-2019 average, and only marginally ahead of investment in Germany, which was only 2% lower than the five year average.
  • Shopping centres | Hammerson’s Chief Executive, Rita-Rose Gagné, told The Times that Hammerson will “reshape entire neighbourhoods” to allow assets to respond to the evolution of e-commerce and that some shopping centres could have as little as 50% retail space.

UK economic news

  • Rate cutting | Halifax bank has launched an ultra-low 0.83%, two-year fixed mortgage on up to 60% of the home value. Last month HSBC and TSB launched two-year mortgages of 0.94%.

Global construction

  • Construction Supercycle | Industry leaders from around the world have predicted a worldwide construction supercycle which could inflate prices as governments fund post-pandemic, and net zero carbon infrastructure projects. Cemex’s CFO suggests that if the US infrastructure bill is passed, demand for cement would be 20% to 30% higher. However, a counterargument is that if construction costs increase, government ambitions could be watered down.

“Code red for humanity”

The UN Intergovernmental Panel on Climate Change’s (IPCC) latest report warns that the world is likely to reach 1.5°C of warming within 20 years in its best-case scenario. Without “immediate, rapid and large-scale reductions” in emissions, limiting warming to 2°C will be “beyond reach”.
The UN Secretary-General, António Guterres said that “Today’s IPCC Working Group 1 Report is a code red for humanity” and that “If we combine forces now, we can avert climate catastrophe. But, as today’s report makes clear, there is no time for delay and no room for excuses”.

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 7,122.95 1.29 18.08
FTSE 250 23,456.16 2.21 33.10
Nikkei 27,820.04 1.97 24.59
CSI 300 4,921.56 2.29 4.54
S&P 500 4,436.52 0.94 32.38
Nasdaq 14,835.76 1.11 34.74
CAC 40 6,816.96 3.09 39.42
Dax 15,761.45 1.40 24.35
$ per £ 1.3872 -0.28 6.37
€ per £ 1.1796 0.61 6.53
Gold £/oz 1,271.20 -2.57 -18.48
Brent Oil $/barrel 70.70 -7.38 61.23

Weekly Summary

Over the last 17 months, we’ve had extraordinary crisis after extraordinary crisis, which followed several years of Brexit unrest. It is understandable that these events may have encouraged a more short-term view of life, with a focus on the current problem at hand. However, the recent report by the IPCC shows that we can no longer afford to ignore or fail to properly consider the future impacts of our actions (or inaction!) delay.

The built environment is responsible for a substantial portion of the UK’s carbon emissions, but it may be in a better position today to tackle this with Net Zero Carbon agendas being embedded in ESG frameworks and greener buildings now becoming the standard for occupiers. But we, as an industry have a responsibility to ensure that these targets are met.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst