Issue 347 | 20 September 2022 - Turner & Townsend alinea

Economic Week In Review | Issue 347 | 20 September 2022

Materials and commodities

Insulation | Sales of home insulation have increased 110% compared to pre-pandemic levels
Oil | The EU’s embargo on will impact Russian oil output causing it to fall by 1.9 million barrels a day (17%) even if products are rerouted through other markets, according to the IEA.
Iron ore prices increased as Covid restrictions loosened in some areas of China.
Coal | China has increased its spending on coal following extreme weather events, leading to a domestic energy shortage and global fuel price pressures. The additional spending has caused many to question how committed the country is to its climate policies.

UK construction and property

Insolvencies | Data from the government shows that construction saw the highest number of insolvencies in Q2 2022, with 19% of all insolvencies attributed to the sector. It also saw a doubling of insolvencies compared to the previous 12 months.
Strikes | Staff at architectural practice Atomik Architecture are holding a strike ballot following pay disputes. It is the first time that a group of private sector architects have balloted for a strike.
Warehouses | Demand for speculative warehouse space has grown with take-up increasing 171% in the last four years according to Colliers.
Output | A number of Main Contractors limited work or stopped work completely during the Queen’s funeral. The Construction Leadership Council had previously warned that the mourning period and the funeral would impact deliveries to site or corporate reputations if work were to continue.

UK economy

Mini Budget | The new Chancellor will announce a new mini budget this week which will outline how the support outlined by Liz Truss almost 12 days ago will be funded.
Big bang 2.0 | The Chancellor is seeking to remove the cap on bankers’ bonuses which was introduced after the 2008 financial crisis. The change will be part of a new “Big Bang 2.0” approach to post-Brexit regulation. The current cap means that year-end payouts can only be twice a banker’s salary.
Interest rates | After delaying its decision on rates due to the period of mourning, the Bank of England is thought to be considering its largest increase to rates in 33 years. The Monetary Policy Committee will meet on Thursday.
“Climate wreckers” will be out of business in 10 years according to the head of KPMG as businesses will be forced to act and respond to both the challenges and opportunities created by change.

Global economy

Germany | Producer prices increased 46% in August, the most substantial monthly increase since 1949.
Sweden has increased interest rates by 1% to 1.75%. It was higher than expected.
Euro area construction output increased 0.2% in July, and is 1.3% higher than the same period last year. Growth rates were not the same across the 27 countries with annual growth in Slovenia increasing 28.5% but Spain’s growth was lower at 5.2%.

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	7,236.68	-1.56	3.92
FTSE 250	18,797.14	-2.04	-20.55
Nikkei	27,567.65	-2.29	-9.61
CSI 300	3,932.84	-3.93	-19.01
S&P 500	3,873.33	-4.77	-12.62
Nasdaq	11,448.40	-5.48	-23.90
CAC 40	6,077.30	-2.17	-7.50
Dax	12,741.26	-2.65	-17.75
$ per £	1.1412	-1.59	-17.03
€ per £	1.1403	-1.23	-2.74
Gold £/oz	1,466.83	-1.02	14.83
Brent Oil $/barrel	91.35	-1.60	21.25

Weekly Summary

Pressure remains on key sources of construction materials despite supply chains organising many new sources and maintaining the flow of goods into the country. Rising prices, combined with high energy prices, and increasing interest rates all represent a substantial threat to companies and general economic health.

We’ve seen a lot of change over the last couple of weeks with a new Prime Minister and Monarch. The industry and its suppliers are waiting to see how these changes, particularly the new Prime Minister and cabinet, can support businesses through this challenging period.