Material input costs are continuing to record increases with most indicators of building components reflecting 2.3% to 3% growth per annum. Mechanical and electrical components are outstripping building components with 2.5 to 3.8% growth per annum, driven by higher raw material pricing, particularly copper and aluminium which recorded 15% and 21% annual rises respectively.
Fuel oils decreased further in the quarter to average US$48, due to over-supply fears, which is slowly being fed through to pump prices reducing headline inflation. Labour rate increases in construction remain ahead of UK average pay rises with Mechanical & Electrical trades driving increases of 3 to 5% against general building labour of 2.2%. Supply remains constrained in specialist trades, compounded by the shortage of new recruits into the industry and the potential for European workers to leave post Brexit. Labour rates are likely to remain volatile for the near term
Unemployment fell to 1.49 million in the three months to May 2017, a new low of 4.5% - the lowest since 1975. The unemployment rate for 16 to 24 year olds was 12.5%, down from 13.5% a year ago and well below the last peak of 22.5% in 2011.
The latest Construction Products Association forecast for output increased in 2017 to 1.3%, up from 0.8% in its February outlook and to 1.2% in 2018, up from 0.7%. On a micro level commercial offices output is declining 1% this year and 12% in 2018, reflecting the latest G&T commercial work load survey. Industrial warehousing is forecast to fall 5% in 2017 and 4% in 2018, whereas private housing is relatively buoyant at 3% in 2017 and 2% in 2018. The main driver increasing the industry output remains infrastructure primarily with government-backed investment programmes