US $53 bbl
2.1% Weekly Earnings
Imported cladding and curtain walling experienced the largest material cost rises during 2017 at 15 to 20% over 2016 levels. The continued fall of Sterling against the Euro may further compound these rises, albeit installation rates have stabilised.
M&E component inputs have increased 7.5 to 12% as they are largely imported from Europe. Whilst material input costs have risen 2.5 to 3.2%, suppliers are concerned over future demand, adjusting their forward pricing with efficiencies and review of margins to remain competitive.
Fuel oils strengthened in the quarter to average US$53 bbl, with increases being passed onto pump prices.
Construction industry labour rates continue to rise but the rate of growth has slowed. National wage agreements by the Construction Industry Joint Council were effected in June at 2.75%, in line with other industry bodies. Rates of pay increases softened over the quarter as future pipeline work appears more tentative.
The construction industry still benefits from a large proportion of non-UK labour, with ONS figures indicating more labour currently entering than leaving the UK.
The UK unemployment rate fell to 4.3% in August 2017, with 380,000 more jobs created in the last year. Non-UK nationals employed in the UK workforce continued to increase, rising 109,000 to 3.56million year-on-year.
Productivity rates measured in output per hour as contribution to GDP are low and marginally below their pre-2008 financial crisis trend, indicating that whilst jobs have been created, they are largely low skilled, low output and not reflective of a significant boost to economic growth.
The Autumn Construction Products Association (CPA) forecast for 2017 output decreased to 0.7% due to slowing economy and rising input costs.
Forecasts for 2018 output remain flat, and may reduce if large infrastructure projects are delayed. The CPA is only confident to publish its output forecasts up to 2019 due to the current lack of certainty.
Growth was anticipated in private house building as private commercial declines whilst, industrial warehousing output remained solid.