• 0.3%
    CPI April
  • 2.1%
    GDP Output 1Q
  • 2.7%
    Wage Increase

Macro Economics

The Consumer Price Index (CPI) measure of inflation fell to 0.3% in April, down from 0.5% in March.

The Bank of England (BofE) latest forecast is an expectation of inflation to increase in the second half of the year.

The alternative Retail Price Index (RPI) measure also fell from an annual rate of 1.6% in March to 1.3% in April.

Falls in measures were attributed to lower air fares, energy and clothing, with the pass through of lower commodity pricing maintaining low inflation. The subdued pace of domestic cost growth was commented by the BofE to be a lesser influence on the current headline figures.

Interest rates remain unchanged at 0.5%

Construction Output

The Construction Products Association (CPA) revised down its forecast for 2016 to 3.0% following a downward revision three months ago. Similarly, its forecast for output in 2017 has been revised to 3.6% from 4.1%.

Retail construction output is expected to fall 1% in 2016, but rise 2% in 2017 whilst residential output remains steady at 5%.

Commercial office output remains strong at 7% in 2016, with a drop off to 6% in 2017.

By 2019 total construction output is expected to be £20 billion higher than in 2015, yet employment is 329,000 lower, highlighting the severe skills shortage and pressure on capacity of the industry to deliver.

Skills Shortage

The latest annual recruitment requirements survey by CITB and Experian highlights shortages across several trades to meet demand for output.

Glazing - 10% per annum

Floorers - 6.6% per annum

Envelope Specialists - 4.9% per annum 

Joinery and Fit-Out - 1.0% per annum

Senior Executives & Managers - 1.1% per annum

The shortage of personnel is driving the rate of wage increases which in turn is fuelling inflation.

Review of 2015

Review of tender pricing received in 2015 confirms a final UK average of 8% year on year tender pricing change. This is up from 7% as last published in our fourth quarter.