The need for change

Economic Week In Review | Issue 376 | 24 April 2023

UK construction and property

  • Social value | Peabody is to add a 20% weighting to social value in its scoring criteria when assessing suppliers. It has historically applied a 2-7% weighting. The social landlord commands £1bn of contracts annually.
  • Robots | Sisk is trialling use of robots which have been developed by Hewlett Packard to draw out floor plans on-site. The companies claim that the work can be done ten times faster than by a person.
  • Plan for Skills | The Construction Leadership Council’s new Skills Plan suggests solutions to short and long-term issues in construction recruitment. Its four main priorities are culture change, routes into construction and the built environment, competence, and future skills. A large part of the CLC’s focus is that it believes more people would enter the construction industry if it had a better image. Schools outreach and apprenticeship mentoring standards are immediate actions.
  • ULEZ concerns | The Builders Merchants Federation has written to the Mayor of London to voice concerns that small builders may be unwilling or unable to trade in Greater London due to the cost of ULEZ compliance. Travis Perkins’ COO commented that they are asking for “more time for residents, tradespersons and workers to be able to adapt”.
  • Anglo-Dutch powerline | A cross-border 1.8GW powerline has been approved and is seen as the first step towards an integrated electricity grid in the North Sea. It could be operational by the early 2030s.

Materials and commodities

  • Rebar | Rainham Steel is to open a new facility in North Lincolnshire to produce rebar.
  • Product testing | An independent review of construction product testing has been published by the government. The 174-page review warns that there are historic failings in the system and it does not judge whether products are safe, just if they meet the standard. The report is part of the building safety programme following the 2017 Grenfell Fire. The chief executive said that the report should be required reading for industry leaders. It can be found here
  • Pulverised Fuel Ash | Hive Aggregates has submitted planning permission for its Retford Circular Economy Project to help meet the shortfall of pulverised fuel ash (PFA) through the excavation of waste sites. The UK Quality Ash Association estimates at least 50 million tonnes of PFA is in disposal sites.

UK economy

  • Retail sales fell 0.9% between February and March, affected by heavy rainfall, a similar story for other indicators in that month. Sales of food products fell 0.7%, affected by shortages.
  • Consumer confidence has risen to its highest level since the invasion of Ukraine, according to GfK. The persistently negative index climbed 6 points to -30. The increase was largely from increased wage growth and government support.
  • General inflation slowed to a rate of 10.1% last month, a smaller fall than was expected. There are large variations in inflation across different product groups. Food prices increased by an average 19.1%, and core inflation (which removes volatile items such as food and fuel) remained at 6.2%.
  • UK PMI | The latest survey rose to 53.9 from 52.2 in March, with a “further robust rise” in new orders suggesting an improvement in the market. Analysts have suggested that this could prompt a further rate rise from the Bank of England.
  • Inflation expectations | Andy Haldane, a former economist for the Bank of England, is certain that inflation will halve in the next six months because of a slowdown in energy price increases. However, he warned that the full effects of increasing the bank rate from 0.1% in late 2021 to 4.25% have not yet been felt fully due to fixed-rate mortgages. He suggests that the Bank should pause its increases for this reason.
  • Profit warnings have risen to Covid-19 levels. 75 warnings were issued in Q1 2022, the highest first quarter level since 2020 and above the ten-year average according to EY-Parthenon.

Global economy

  • Eurozone recovery | The overall PMI from S&P Global increased to 54.4 in April, from 53.7, reaching an 11-month high. Inflation levels moderated, but manufacturing output declined.
  • Oil and gas | Germany is planning to ban new installation of most oil and gas heating from next year, however, the Bill was met with much debate and opposition.
  • Car-free | A three-month car-free trial period will begin in Lisbon this week. Cars will no longer be able to drive through the centre, and a larger exclusion zone is in place for vehicles over 3.5 metric tons between 08:00-20:00.
  • US economy | The Federal Reserve’s latest report reveals a stalling economy as hiring and inflation have slowed and access to credit narrowed. Concerns have also increased on the news that foreclosures have increased for the last 23 months, jumping 22% between Q1 2022 and Q1 2023.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 7,914.13 0.54 5.22
FTSE 250 19,270.01 0.14 7.72
Nikkei 28,564.37 0.25 5.38
CSI 300 4,032.57 -1.45 0.48
S&P 500 4,133.52 -0.10 -3.24
Nasdaq 12,072.05 -0.42 -5.97
CAC 40 7,577.00 0.76 15.13
Dax 15,881.66 0.47 12.30
$ per £ 1.2419 0.02 -3.34
€ per £ 1.1318 0.07 -4.96
Gold £/oz 1,593.46 -1.29 5.90
Brent Oil $/barrel 81.66 -5.39 -23.36

Weekly Summary

Two significant reports were issued in the last week; the Government’s independent review of product testing and the CLC’s latest plan for skills. Both of these reports should have enduring impacts on the evolution of the industry and therefore serve as vital reading.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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