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Economic Week In Review | Issue 378 | 9 May 2023

UK construction and property

  • Housing market | Housebuilders saw an unexpected rally in share prices as significant concerns over house prices abated. Nationwide reported that house prices rose between March and April, after falling for seven consecutive months.
  • Housing reforms | Michael Gove is to speed up a number of reforms in the housing market. This week will see the publication of the renters reform bill which will end “no-fault evictions”. Changes to the leasehold system will be introduced in autumn and are expected to cap the amount of yearly ground rent that leaseholders can charge.
  • Output | The S&P Global/CIPS Purchasing Managers’ Index showed growth from 50.7 in March to 51.1 in April. The growth was driven by commercial building and a resilience in civil engineering. Housebuilding reported its steepest decline in almost three years.
    • Activity | The latest RICS survey suggests a rebound in construction activity in Q1 2023. Credit conditions were highlighted as a challenge, but there are early signs of this easing. Private commercial work has improved, private housing remains negative, but infrastructure continues to be the most positive.
  • Innovation | The British Property Federation and the UK PropTech Association merged, with many expecting the new relationship to drive innovation which will help the industry tackle some of the big challenges it is facing.
  • Net zero | A report by Barbour ABI concludes that new regulations for energy efficiency could cause the closure of office buildings, negatively impacting town and city centres. It warns that current pressures, and the lack of levelling up funding could encourage landlords not to invest to meet new obligations. Analysis of planning applications for office repair, maintenance and improvement shows that they are still 40% lower than pre-Covid levels despite increased regulatory levels.
  • New house building registrations with the National House Building Council are 40% lower in Q1 2023 than in Q1 2022. New home completions were 9% lower as builders focused on finishing existing plans rather than starting new ones.

Materials and commodities

  • Heavy side building materials | Demand rebounded in the first quarter of 2023 according to the Mineral Products Association’s (MPA) survey of industry sales. Mortar sales rose 6%, primary aggregate 3.3% and asphalt by 1.8% between Q4 2022 and Q1 2023. However, sales volumes were still lower than in Q1 2022 and Q1 2021. Demand is being underpinned by large infrastructure schemes such as HS2 and Hinkley Point C. The MPA raised concerns over the decision to freeze public spending capital budgets in cash terms.
  • Carbon reduction | Marshalls, building material producer, is working on two ways to reduce carbon in the environment. It declared itself the first UK pre-cast concrete manufacturer to use CarbonCure technology to lock carbon into concrete. It is also exploring viable alternatives to cement and last year produced its first production run of cement-free concrete blocks.
  • Gold prices are being pushed close to an all-time high as uncertainty rules in the US banking system.

UK economy

  • Consumer spending by value grew at roughly half the pace of inflation in April, despite the leisure sector seeing “renewed momentum” according to KPMG. Volumes were down for both food and non-food.
  • Interest rates are expected to be increased this month for the twelfth successive increase since December 2021.
  • Mortgages | Figures from the Bank of England show that approvals for mortgages rose 18% between February and March, but remain well below the long-term average.

Global economy

  • Foreign investment into Europe from China is falling as regulators blocked 10 of 16 proposed deals in Europe’s tech and infrastructure sectors. The UK, Germany, Italy, and Denmark all raised objections. Investment fell 22% in 2022, according to Rhodium Group and Merics.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,778.38 -1.17 5.28
FTSE 250 19,452.50 0.14 -1.85
Nikkei 29,157.95 1.04 7.98
CSI 300 4,016.88 -0.30 2.76
S&P 500 4,136.25 -0.80 0.31
Nasdaq 12,235.41 0.07 0.75
CAC 40 7,432.93 -5.56 18.77
Dax 15,961.02 0.24 16.72
$ per £ 1.2647 0.53 2.43
€ per £ 1.1472 0.68 -1.76
Gold £/oz 1,596.81 0.85 4.63
Brent Oil $/barrel 75.30 -5.33 -33.43

Weekly Summary

The industry seems to be at something of a turning point: busy building out schemes that have already been committed to, whilst nervous about what comes next especially as infrastructure continues to drive demand and housebuilding weakens.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst