Furloughed employees in construction one of many puzzles

Furloughed employees in construction one of many puzzles in our disrupted market

BLOG · BY TTF HEAD OF TECHNICAL AND TRADE NICK BOULTON · 30 July 2021

The Construction Products Association (CPA) webinar this week went into more detail on their Summer Forecast, paired with the State of Trade Survey, they provide a fascinating picture of the market.

We had the pleasure this week of attending the Construction Product Association’s (CPA) webinar discussing their Summer Forecast (available for members here). As always, Noble Francis provided some really interesting insight into the UK economy, the construction sector, and the potential future of the construction products industry.

A few of the key insights I would like to highlight from the webinar are:

  • Housing demand continues to be strong and house builders are confident on demand until at least Q1 2022.
  • Private housing rm&i demand remains strong & SMEs have projects lined up throughout this year but materials availability & cost is a major issue.
  • There has been a sharp rise in shipping costs from China to Northern Europe, with the cost of a container rising from £1,500 to £13,208 between November 2020 and July 2021.
  • UK construction still had 139,200 employees on furlough according to HMRC payments made to contractors despite the recovery in activity.

 

These furloughed employees are a puzzling statistics given the skills crisis, with many firms reporting difficulty in finding the labour they need amidst rising demand. While about half can be accounted for by firms working with underutilised commercial buildings or sectors in which activity hasn’t returned to pre-Covid-19 levels, the other half seems a mystery.

In any case, mystery aside the greater the tension in the labour market the stronger the push becomes for construction to integrate technology and automation. One fascinating insight into intelligent industrial warehouses automation brought to our attention today comes from Ocado’s grocery warehouse, where thousands of mechanical boxes sort groceries for delivery in a space the size of seven football fields.

The Summer Forecast was not the only report we received from CPA this week, as we also received the State of Trade Survey (locked for TTF members). Again, pulling out a few key statistics we can see;

  • 63% of heavy side firms and 44% of light side firms reported that sales rose in Q2, the fourth consecutive quarter of growth.
  • Manufacturers’ sales expectations for the next 12 months remained positive, with 79% of heavy side firms anticipating a rise, the highest balance in nearly eight years.
  • Raw materials remained the key driver of inflation, with all product manufacturers surveyed reporting higher costs.

 

These reports showcase some of the tension in the market, as we did in our latest Market Statement, and in our Monthly Statistics which helped inform this report. The movements in supply, demand, and price since the pandemic are likely to continue to produce many interesting economic quirks in the months ahead.

As always, nothing in the global economy happens in isolation – and the UK, Brexit or no Brexit, is not an exception to this rule. While we still foresee a return to a more stable situation as the pandemic eases, there remain many ‘black swans’ or indeed ‘black elephants’ which could upset the balance.

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