Issue 355 | 14 November 2022 - Turner & Townsend alinea

Economic Week In Review | Issue 355 | 14 November 2022

UK construction and property

Housing market | The latest UK Residential Market Survey by the RICS shows that new buyer enquiries have fallen for a sixth successive month and the headline net balance has fallen to -55% (the survey records +100 to -100).
Property | MSCI’s UK Quarterly Property Index shows a slump over the last quarter, with industrial property hardest hit, and retail fairly resilient. The index which tracks retail, office, industrial and residential property, fell 4.3% in the last quarter and for the first time since 2007, property yields fell below government bond yields after the UK Growth Plan was announced.
Playbook | Developed by clients, contractors and consultants within the built environment, a new playbook for the private sector looks to help drive a step change in the way projects are commissioned, procured, developed, and operated. Read the playbook here.
Labour | Self-employed wages rose to a record high last month, according to Hudson Contract. The fastest annual growth was seen in the North West (11.7%) followed by London (8.9%). Demolition and scaffolding trades saw the greatest increases (13.5% and 11.8% respectively).
Output in the construction industry | Bucking the trend, output rose 0.4% in September, the third successive month of growth. New orders were up 6.4% in Q3, mainly from private commercial orders.

Materials and commodities

Mineral products | The Mineral Products Association’s latest survey shows that the demand for aggregates, asphalt, and ready-mixed concrete fell for the second consecutive quarter in Q3. It warned that an otherwise solid pipeline of future projects was being threatened by unprecedented cost pressures.

UK economy

Growth | The UK’s economy shrank in September by 0.6%, larger than the 0.4% which was expected. Around half of the fall has been attributed to the additional bank holiday for the Queen’s funeral, as consumer-facing services fell the most. Overall quarterly growth fell 0.2%.
Strikes | Industrial action is expected to rival the “winter of discontent” seen in 1978-79 as ballots covering one million workers in schools, hospitals, transport, postal and local services are expected to result in further strikes.
Post-Covid recovery in employment has been slower in the UK than in other developed nations. It is expected to be the only developed country in the world to have employment levels still below pre-pandemic levels at the beginning of 2023. The Institute for Employment Studies found that there has been a large increase in economically inactive people, largely due to long-Covid.
Normality | Andrew Bailey, Governor of the Bank of England, warned that efforts to curb inflation are likely to take between 18 months to two years to have full effect.
Business confidence in the UK has fallen to its lowest level since 2009. The latest report by Accenture and S&P Global showed a net balance of 18% in October, compared to 56% in February.

Global economy

US CPI fell to a 9-month low in October indicating that the worst of its post-pandemic price spike is over. Prices still increased by 7.7% on an annual basis. Goldman Sachs expects a significant easing of US inflation in 2023.

Friday to Friday

	Price / Index	Week % change	Annual % change
FTSE 100	7,318.04	-0.23	-0.21
FTSE 250	19,616.21	6.95	-16.73
Nikkei	28,263.57	3.91	-4.55
CSI 300	3,788.44	0.56	-22.50
S&P 500	3,992.93	5.90	-14.71
Nasdaq	11,323.33	8.10	-28.61
CAC 40	6,594.62	2.78	-7.01
Dax	14,224.86	5.68	-11.61
$ per £	1.1798	4.57	-12.02
€ per £	1.1416	0.12	-2.58
Gold £/oz	1,496.46	1.24	7.64
Brent Oil $/barrel	95.99	-2.62	16.82

Weekly Summary

Construction was a bright spot in September’s GDP data, as it was the only sector of the economy to show growth despite most major sites also closing for the funeral of Queen Elizabeth II. However, it is not all positive as the latest wage data shows that local labour rates, particularly those in London are increasing at a rate faster than was suggested by the average wage published by the ONS.

The Autumn Statement will be presented this week, along with the much-anticipated forecast from the Office for Budget Responsibility. The industry will no doubt be looking for clarity on the future of public spending in light of fresh talk of austerity, and how this will impact planned publicly funded construction work.