New beginnings, old problems

Economic Week In Review | Issue 437 | 8 July 2024

UK construction and property

  • Safety | Annual data from the Health and Safety Executive shows that construction worker fatalities in the UK are 70% higher than pre-pandemic levels. Construction saw almost double the second-worst affected industry – agriculture, forestry and mining. In 2023-24 there were 51 fatalities, higher than the five-year average of 42.
  • Safety investigations | Data obtained by Construction News under the Freedom of Information Act show that investigations by the Health and Safety Executive (HSE) into falls from height have reduced to 107, from 211 in 2017.  The HSE has scaled back its investigations and has abolished its construction division. Investigations into fatal incidents have not declined.
  • Output | The S&P Global UK Construction PMI rose to 52.2 despite a fall in housing activity. It recorded the sharpest rise in employment for ten months, and commercial activity was the main driver of growth. Respondents to the survey said that inflationary pressures remained muted. Anecdotal evidence within the survey suggests that confidence improved with new orders showing a fifth consecutive increase.

Global economy

  • Eurozone construction | The latest PMI survey showed that activity fell from 42.9 in May to 41.8, the second-strongest rate of decline since mid-2020. Analysts said that the eurozone’s construction sector is stuck in a recession with no clear path to recovery and have encouraged rate cuts from the European Central Bank.
  • French election | A coalition of left-wing parties (the New Popular Front) won the majority of seats but not enough to form a government so will look to negotiate to agree on a new prime minister. Marine Le Pen’s far-right National Rally will not be in power. Whilst investors are encouraged that the worst-case scenario has been avoided, many are concerned that it means more uncertainty.

UK economy

  • Car sales | 1 million new cars were sold in the first half of the year for the first time since 2019, according to the Society of Motor Manufacturers and Traders.
  • Wage growth expectations | According to the Bank of England, UK employers expect wages to grow more slowly in the next 12 months than in the last. Expectations are at the lowest since the survey started in May 2022, with wages expected to rise by 4.2%.
  • Four-day week | South Cambridgeshire District Council has been trialling a four-day week for public services and found that productivity has improved in 11 of the 24 areas. Fewer refuse collectors have quit, and planning decisions were made faster.
  • Growth Plan | The new Chancellor Rachel Reeves made a speech outlining new measures to spur private investment. Announcements included mandatory house-building targets, a raft of planning reforms and an assessment of state spending which is due by the end of the month. A statement will be made to MPs before the summer recess on the “spending inheritance”.

Materials and commodities

  • Builders Merchants sales were boosted by the extra trading days in April 2024, compared to April 2023. Takings were up 3.9% year-on-year but were 11% down on a like-for-like (per day) basis.
  • Strikes | Samsung Electronics has been affected by its first-ever walkout by staff in South Korea. The union expects some disruption in chip making, whilst Samsung says its operations are unaffected.
  • Steel support | The new Business Secretary has spoken to Tata Steel about the Port Talbot plant as the new government said that it will make job guarantees a requirement of any state support package. The previously agreed £500m taxpayer support was not signed before the election.
  • Steel prices | British Steel announced two £30/tonne price increases for hot rolled sections, citing a “sustained high level of raw material input costs” and “the ongoing challenging trading conditions”.
  • Container shortage | Shipping faces a scarcity of containers caused by increased demand between Asia and the US as well as longer transit times due to rerouting around the Cape of Good Hope.
  • Humanoids | Japan has introduced a 12-meter-tall machine with arms that can be fitted with blades and paint brushes. The machine will be operated by a person in the cockpit, will run on train rails and be used to maintain the tracks by cutting vegetation or carrying heavy objects. It is hoped that it will fill worker shortages and reduce the need for people to carry out hazardous work.

Environment

  • Water pollution | A Supreme Court judgement has determined that water companies can be held liable for sewage pollution in UK waters. Private citizens can bring actions under the laws of nuisance or trespass.
  • Global temperatures | June broke global temperature records for the 13th month in a row. The Earth has also exceeded the 1.5C limit set by the Paris Agreement for the third month in a row.
  • Heat warnings | Heatstroke warnings have been issued across Japan as the number of heatstroke-related deaths each year has increased sixfold since 19995. Temperatures reached 40C for the first time this year on Sunday. 35C is considered “extremely hot”.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 8,203.93 0.49 13.05
FTSE 250 20,786.65 2.47 15.46
Nikkei 40,912.37 3.36 26.32
CSI 300 3,431.06 -0.88 -10.32
S&P 500 5,567.19 1.95 26.56
Nasdaq 18,352.76 3.50 34.35
CAC 40 7,675.62 2.62 7.93
Dax 18,475.45 1.32 18.41
$ per £ 1.2807 1.35 -0.23
€ per £ 1.1828 0.25 1.00
Gold £/oz 1,866.61 1.45 24.51
Brent Oil $/barrel 86.54 0.15 10.28

Weekly Summary

The change of government has rightly prompted discussion of tackling construction’s skills shortages, planning issues and net zero. Whilst the mechanics for many of the election pledges fall into place, the new leadership must ensure that planning decisions and focuses that were put on hold during the election period are rapidly put back on track.

This week’s startling news that construction worker fatalities are increasing is a worrying trend. It should force the sector to examine the reasons for this, and how to put processes in place to improve safety on site.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst