Issue 446 | 9 September 2024 - Turner & Townsend alinea

UK construction and property

Activity | Construction industry growth has continued for six months in a row. The S&P Global UK Construction Purchasing Managers Index (PMI) registered at 53.6 for August. Any figure above the neutral mark of 50 represents an uptick in activity.
MMC concerns | The House of Lords has called for the Building Research Establishment (BRE) to be stripped of its responsibility for certifying modern methods of construction (MMC), following criticism in the Grenfell Inquiry.
Master-developer | Barratt, Homes England and Lloyds Bank will invest £150m into a new partnership called MADE which will act as a master developer of large sites.
Digital proof | Paper certificates are being increasingly phased out as digital proofs are seen as vital in safety-critical products. The UK Certification Authority for Reinforcing Steel (CARES) said that the Grenfell Inquiry showed that paper routes to certification were an “unacceptable vulnerability.”

Eurozone inflation dropped to 2.2% in August from 2.6% in July, the lowest in three years, bolstering expectation that the European Central Bank will reduce interest rates this month. Core inflation also saw a decrease however, service inflation – closely monitored by policymakers – rose to 2% from 4.0% despite the fall in energy prices.”
Industrial strategy | The former chair of the European Central Bank (ECB) has said that the bloc needs radical and rapid reform to stop falling behind the US and China. He recommended a coordinated industrial strategy and €800bn in investment, saying that Europe is “stuck in a static industrial structure, populated by mid-technology companies which are already mature.” He added that there are too many barriers to commercial innovations.
Germany | Volkswagen has announced the closure of two factories in Germany. The move was met with protests from the workforce. The sector is struggling under tighter emissions rules, subdued demand, and increased competition from China.
US jobs | The US economy added 142,000 jobs in August, strengthening expectations of a cut to interest rates.

House prices | According to Halifax, house prices have increased at their fastest rate in almost two years, increasing by 4.3% in the year to August. Halifax says that the prospective buyers are more confident due to easing interest rates. Mortgage approvals are also at their highest levels in two years.
Investment | A UK Capital Markets Industry Taskforce (CMIT) paper called The Capital Markets of Tomorrow claims that to achieve at least 3% annual growth, the UK needs to attract £100bn of investment every year, across key sectors, with additional venture capital to enable companies to grow.
UK growth | Bloomberg reported that the UK enjoyed a “goldilocks” start to 2024, outperforming peers with cumulative growth of 1.3% across the first two quarters. It also reported that consumer confidence is increasing, but next month’s Budget is expected to be “ghoulish”.
Office staff | Santander has refined its hybrid working rules, changing a requirement of two days a week at one of its sites, to 12 days a month (effectively three days a week). Lloyds bank, however, has agreed to let staff work at home three days a week, or five over the summer period.
Jobs | The KPMG and REC UK Report on Jobs showed that salary pressures eased in August with a steeper fall in permanent placements. Employers continue to face a challenging period, particularly for long-term planning.

Crude oil | China’s economic slowdown and deepening property crisis is continuing to put pressure on the crude oil market. Ongoing disruption in Libya due to political conflict has reduced production by over one million barrels per day over the past week.
Lithium | Northern Lithium, a London-backed start-up, is planning a £6m funding round. The company intends to drill the Northern Pennines and claims a 30-day drilling test exceeded expectations.
Materials | The latest Builders Merchant Building Index showed that sales values at builders merchants were 5.8% lower in Q2 2024 compared to a year earlier with volumes 7.2% lower and prices up 1.5%. The two largest categories saw significant falls; Timber & Joinery fell by 7.4%, and Heavy Building Materials fell by 8.4%.

Hottest on record | For the second year straight the summer broke global heat records putting 2024 on track to be the hottest year in recorded history. This summer was 0.69 degrees Celsius hotter than the 1991 to 2020 averages beating the record set last summer by 0.03 degrees, according to Copernicus, Europe’s climate change service.
Typhoon | Super Typhoon Yagi, Asia’s strongest storm this year, roared into China’s Hainan on Friday, bringing violent gales, heavy rain, and power outages that affected 830,000 Hainan households and forced schools, airports, businesses, and the Hong Kong stock exchange to close.