Issue 318 | 28 February 2022 - Turner & Townsend alinea

Economic Week In Review | Issue 318 | 28 February 2022

Materials, goods and currencies

Currency | The US dollar rose against almost everything prompted by the Russia/Ukraine crisis and as Russians bought dollars expecting sanctions to negatively impact the Rouble, which fell 28% as tighter sanctions were imposed, adn interest rates in Russia were more than doubled to 20%.
Commodity sales | Low stocks of commodities, and the threat of future inflation have encouraged investors into commodity markets. Citigroup Inc estimates that retail and institutional money in the market has reached $700bn, the highest since 2007. The market is also experiencing “backwardation” where near-term supplies are reaching higher prices than future assets.
Oil | Goldman Sachs increased its one-month forecast for Brent oil from $95/barrel to $115, adding that there are significant upside risks and that only demand destruction can restrain prices.

UK construction and property news

Vaulted thin shell floor | Researchers from the Universities of Bath, Cambridge, and Dundee unveiled a full-scale prototype of a thin-shell floor that uses 60% less carbon to construct than a standard flat slab whilst carrying the same load.
Carbon calculator | Laing O’Rourke launched a new tool to quickly analyse the embodied carbon levels in digital designs.
Low carbon concrete | Tarmac is using low carbon concrete from Align on a section of HS2. It in claimed to offer a 62% saving in CO2 compared to standard concrete.
Pathfinder | National Highways has given itself the target to make the Lower Thames Crossing the greenest road construction ever in the UK, calling it a “pathfinder” project. Options being explored include banning diesel plant from site and looking at alternatives to concrete and steel.

UK economy

“Peak recycling” | The Mineral Products Association has said that the recovery and reuse of construction waste as aggregates is reaching its upper limit. Recycled and secondary aggregates account for 28% of aggregate demand in the UK.
Fire safety | The Construction Industry Council has warned that recent amendments to the Building Safety Bill, including the plan to extend defects liability are “unworkable” and could risk shutting SMEs out of the housebuilding market.
Builders’ merchants | Revenues were up 30% in 2021 compared to 2020, however, the increase was due to rising prices rather than increasing sales volumes.
Tower sales | Singaporean investor Ho Bee is in talks to buy the Scalpel in the City of London from US insurer WR Berkley for £800m

UK economy

Borders | Only a third of British businesses have confidence that the UK and EU will resolve problems at the UK border, believing that it will fall to firms to reduce costly delays, according to a survey by Clearborder.

Global news

Food pressures | The price of wheat increased to the highest since 2008 as together, Russia and Ukraine account for a third of the global supply.
Construction in China | The Chinese government hoped to stabilise growth by front-loading pro-growth policies in 2022, to push early sales of bonds to fund investment and ease curbs on the construction industry. However, construction has shown no signs of improvement with PMI indicators and machinery sales all suggesting a slump. ING Groep NV cut expectations for construction growth in China from 5.4% to 4.8%.

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	7,489.46	-0.32	15.52
FTSE 250	20,906.75	-2.13	-0.02
Nikkei	26,476.50	-2.38	-8.59
CSI 300	4,573.43	-1.67	-14.30
S&P 500	4,384.65	0.82	15.05
Nasdaq	13,694.62	1.08	3.81
CAC 40	6,752.43	-2.56	18.40
Dax	14,567.23	-3.16	5.66
$ per £	1.3401	-1.34	-3.92
€ per £	1.1903	-0.74	3.24
Gold £/oz	1,408.44	0.84	13.04
Brent Oil $/barrel	97.93	4.69	48.09

Weekly Summary

The war in Ukraine can be thought of as the third ‘once in a lifetime event’ in recent years, and as well as a humanitarian crisis, is sending shockwaves across investment markets, which have reacted acutely but are also still coming to terms with the full range of potential impacts. There is no doubt that uncertainty and price volatility will persist for some time.

No-one can be sure exactly what this means for UK real estate and construction, let alone the global economy, though corporate deals and bond markets have already dried up, and there will be a natural hardening of risk aversion. Certain commodities have surged, exacerbating the large rise in energy costs, meaning that both the supply and demand sides of the equation are in a delicate balance.

It is imperative that data and trends are actively and constantly monitored, and procurement strategies remain as flexible as possible.