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Economic Week In Review | Issue 420 | 11 March 2024

UK construction and property

  • Payment terms | According to the National Federation of Roofing Contractors (NFRC), less than a third of invoices are paid within the 30-day terms and there has been no improvement under the requirement to publish payment practices. The NFRC stated that high labour costs were also affecting the sector.
  • PMI | The S&P Global UK Construction Purchasing Managers’ Index remained in negative territory (49.7) but showed an improvement on last month’s reading and the rate of new business growth was the fastest since May 2023. Business optimism improved to its highest level since January 2022. Yet the rate of job shedding increased to the fastest since November 2020.
  • Housing shortage | Thinktank Radix Big Tent has encouraged Dame Kate Barker – who led an inquiry into housing undersupply for the Labour government 20 years ago – to lead a new commission into England’s housing shortage. It will focus on four themes: freeing up more land for development; the role of specialist housing; approaches to sustainability; and ensuring affordability.
  • House prices | Halifax’s latest survey shows the average UK house price rose by 0.4% in February, the fifth consecutive monthly increase.
  • Land registry fees | HM Land Registry is launching a consultation on its current fee levels and charging structure, stating that its current approach can seem too complex.
  • Roads | The A66 Northern Trans-Pennine dualling has finally received planning consent. The project was recommended in 2016 and listed as a “Project Speed pathfinder” project, had public consultations in 2019 and 2021 and was expected to receive the green light in November but was delayed allowing for more impact assessments.
  • Trams | After the Prime Minister floated the idea that £2.5bn funding for a tram line could be made available from the unspent HS2 funds, West Yorkshire Mayor Tracy Brabin has announced a tram system between Leeds and Bradford.
  • Housing association cash | The Regulator of Social Housing has warned that England’s largest providers’ cashflows are “insufficient to fund net interest payments.” Inflationary cost pressures and the need to update stock have caused cash to reduce from £5.8bn before the pandemic to £4.2bn.
  • Retrofit first | Westminster City Council announced plans to adopt a ‘retrofit-first’ approach to help it reach net zero by 2040. Developers must explore retrofit options before demolishing and will face carbon off-setting payments up to nine times higher than current levels.

Materials and commodities

  • Sales | Builders’ merchants reported that sales volumes were down by almost 14% between 2022 and 2023. Timber and joinery products made the largest contribution to the fall. Annual price growth was 10%, which limited the fall in annual sales value to 5.1%.
  • Iron ore | Stockpiles at Chinese ports are at the highest levels for a year pushing prices down 5%. Steelmaking in China has fallen by nearly 25% since its January peak.
  • Russian gas | Ukraine’s energy official has ruled out any commercial agreements which would allow natural gas to pass through the country after some market participants were encouraging the idea.
  • Ukrainian steel | Following Russia’s invasion of Ukraine and the destruction of its steel plants, Ukrainian steel production fell 70%. However, output has increased 52% so far this year thanks to a new Black Sea export route.

UK economy

  • Post-Brexit imports | Industry bodies on both sides of the Channel have warned that the British government has failed to properly prepare for a new post-Brexit border and that key operational information is still missing just weeks ahead of the new border rules coming into force. Border checks have been delayed five times since their intended introduction in January 2021.
  • Job vacancies | Data from Reed Recruitment shows that vacancies fell by almost 25% in the three months to February, when compared to a year earlier, however, applications rose by a fifth in the same period. Job postings have fallen every month in the last 21 months.

Global economy

  • US inflation | The latest US Consumer Price Inflation movement will be announced on  Tuesday. Many expect that pressures will have eased.
  • US office market | Canada Pension Plan Investment Board has sold its 29% stake in New York building (360 Park Avenue South) for $1 to Boston Properties who also took on the pension fund’s debt on the building.
  • Japanese inflation | The Bank of Japan has signalled that it may begin to raise interest rates as early as March or April. It has had a negative base rate since 2016.
  • China’s growth target | China’s Premier Li Qiang spoke about China’s annual growth target saying, “it is not easy for us to realise these targets…We need policy support and joint efforts from all fronts.”

Environment

  • Climate risks | In its first risk assessment, the European Environment Agency (EEA) has warned that Europe is not prepared for the rapidly growing climate risks it faces. More action is needed to address half of the 36 significant risks it identified, and five more risks need urgent action.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 7,659.74 -0.30 -1.14
FTSE 250 19,601.78 1.28 1.26
Nikkei 39,688.94 -0.95 41.02
CSI 300 3,544.91 0.20 -10.64
S&P 500 5,123.69 -0.26 32.68
Nasdaq 16,085.11 -1.17 44.40
CAC 40 8,028.01 1.18 11.18
Dax 17,814.51 0.45 15.47
$ per £ 1.2850 1.57 6.71
€ per £ 1.1745 0.57 3.95
Gold £/oz 1,694.49 2.94 9.14
Brent Oil $/barrel 82.08 -1.76 -0.85

Weekly Summary

Last week’s Budget outlined the challenges that businesses and households are facing as a result of the recent period of low growth and high inflation. This week will see the ONS release data on jobs, wages, vacancies, and construction output will provide a vital overview of how the industry is dealing with these challenges.

This time last year, analysts were convinced that the housing market was headed towards a crash because of the challenges in the market, but the news from Halifax shows that there is greater resilience in the market, perhaps unintentionally, from our inability to build enough homes to meet the needs of a growing population. As we inch towards a General Election, housing must surely be a focus.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst