Stabilisation amid volatility?

Economic Week In Review | Issue 541 | 10 August 2026

UK construction and property

  • Professional indemnity (PI) insurance costs for construction firms dropped 15-20% from early 2025 to early 2026. A report by insurance broker, Gallagher’s credits insurer profitability, more market capacity, and increased competition for lower premiums and better risk coverage.
  • Construction insolvencies rose 60% in July, with 32 firms entering administration. Most were small businesses. Analysts noted ongoing challenges: political uncertainty, low investment, skill shortages, reduced demand, and possible material cost increases from geopolitical issues.
  • UK construction activity fell in July 2026, but at a slower rate. PMI increased to 44.7 from 38.4 in June, the highest since March. All sectors declined less. Firms saw more tender opportunities in commercial, housing, and transport projects. Input cost inflation eased, though fuel and material costs are still concerns. Business confidence reached its highest since February.
  • Social-value procurement | From 1 January 2027, the UK will drop net-zero criteria from social-value assessments, focusing on jobs, skills, pay, and working conditions. Environmental requirements remain; suppliers bidding for central government contracts over £5m/year will still have to submit a carbon reduction plan.
  • UK construction workload | The RICS Construction Monitor reports UK construction activity declined in Q2 2026, but less sharply. The report suggests the UK construction market may be stabilising due to infrastructure investment. However, housebuilding is still under pressure, with ongoing labour and material shortages. RICS remains cautious about industry outlook through 2027.
  • Apprentices | British Steel is set to welcome 70 new apprentices and graduates next month, following over 1,000 applications. The company has restarted its graduate recruitment programme, marking these as the first graduate hires since 2022.

Global economy

  • US trade deficit | The US trade deficit decreased from $77.6 billion in May to $73.3 billion in June. A smaller trade deficit can positively impact GDP growth, as it indicates reduced spending on imported goods compared to exports. In this instance, the improvement was mainly due to a decline in imports rather than an increase in exports, which could also suggest a slowdown in domestic demand.
  • US jobs | In July, the US lost 23,000 jobs, mainly in local government, education, and retail. Despite this, the unemployment rate dropped to 4.1% from 4.2%, as fewer people joined the labour force.
  • Chinese exports grew 23.9% year-on-year in July, surpassing the 22.2% forecast. Strong demand and rising AI-related shipments, especially integrated circuits, drove growth despite global trade tensions.
  • Tariffs | US president Donald Trump has issued an executive order that places a 15% tariff on imported polysilicon products, which are essential for manufacturing solar panels and semiconductors. The order also sets minimum import prices for products related to polysilicon, with these measures scheduled to begin in December 2026.

UK economy

  • Hacking risk | A recent MakeUK survey revealed that 30% of British manufacturers faced a cyber incident impacting either their own operations or those of a supplier in the last year, emphasizing the increasing cyber risks within the industry. Despite this ongoing threat, only about half of manufacturers have established a formal response plan for cyber-attacks. Such incidents often result in lost production time, increased operating costs, and disruptions throughout the supply chain.
  • UK employment | According to data from KPMG and the Recruitment and Employment Confederation (REC), the labour market appears to be stabilising following an extended period of slowdown. Jobseekers, particularly those with specialised skills, are seeing better conditions, with increased pay growth and a rise in hiring activity. Still, the pace and strength of the recovery will mainly depend on overall economic confidence and upcoming government policy decisions later in the year.

Materials and commodities

  • Brick deliveries dropped 16% year-on-year due to reduced construction and economic uncertainty. Leading manufacturers reported lower sales and profits, with early-stage housebuilding products also declining. Fabricated structural steel prices rose 17.7% annually to June 2026, impacted by higher energy costs, and experts expect further increases into Q3 2026. New UK steel import tariffs and quotas from July have further increased cost pressures.
  • BMBI | The most recent Building Merchant Building Index (BMBI) May 2026 shows steady sales values but lower sales volumes. This pattern of stable sales alongside decreasing volumes indicates that builders are buying fewer materials, reflecting reduced construction activity and the absence of a clear project pipeline. Additionally, merchants appear to be depending on price increases to sustain their revenue.

Environment

  • Temperature records | According to Copernicus data, regions with a combined population of about 900 million people—including the Sahel, Central America, France, and Spain—experienced their hottest July on record in 2026. Scientists caution that there is an increasing chance that 2026 could rival or even exceed 2024 as the hottest year ever recorded.
  • Heatwave costs | A study conducted by the LSE and the Euro-Mediterranean Centre on Climate Change (CMCC) found that the June 2026 heatwave led to a loss of £1.15 billion in productivity for the UK economy and caused 24 million working hours to be lost, with outdoor and physically demanding jobs being especially impacted. These results have sparked renewed demands for improved workplace heat safety measures.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,839.19 -0.27 19.17
FTSE 250 24,854.86 3.67 13.19
Nikkei 65,606.71 1.93 56.88
CSI 300 4,694.44 2.32 14.36
S&P 500 7,757.64 3.58 21.41
Nasdaq 26,690.62 5.19 24.43
CAC 40 8,714.93 2.41 12.55
Dax 26,319.45 2.69 8.93
$ per £ 1.3500 0.57 0.56
€ per £ 1.1700 0.23 1.49
Gold £/oz 3,218.58 7.35 27.42
Brent Oil $/barrel 83.55 -7.29 25.47

Weekly Summary

Last week’s construction PMI figures indicated that construction output continued to decrease, but at the slowest pace seen in the past four months. This marks the longest period of decline since the global financial crisis in 2008. The data for July suggests that the construction sector may be beginning to stabilise following a significant downturn during the second quarter of 2026, echoing insights from the latest RICS Construction Monitor report.

The Department for Business and Trade reported that construction material price for all work increased by 6% year-on-year up to June 2026. This notable rise aligns with ongoing disruptions caused by the Middle East conflict, with especially strong inflationary pressures on energy-intensive products likely to continue in the short term due to recent fluctuations in energy prices. However, prices like cement saw the steepest annual decrease of all products measured at 4.5%, highlighting the extreme fluctuation in material prices.

Author contact

Rachel Coleman
Rachel Coleman,
Director, Market Insight
Kishan Patel
Kishan Patel,
Research Analyst

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