Market Intelligence Analysis of Brexit · • NACF Market Intelligence Maps • Samples of...
Transcript of Market Intelligence Analysis of Brexit · • NACF Market Intelligence Maps • Samples of...
Market Intelligence Analysis of Brexit
Presented by Steve Baker
YORhub Frameworks Joint Chair of Operations
and Group Manager Construction Management Services
East Riding of Yorkshire Council
Data sets reviewed
• Markit/ Chartered Institute of Procurement & Supply Data
• Government Office of National Statistics
• Federation of Master Builders
• NACF Market Intelligence Maps
• Samples of Contractor Feedback
Markit/ CIPS Data 29 November 2016
Source: IHS Markit/CIPS
UK Construction PMI® by Category of Activity
Brexit Vote
Key Findings 29/11/2016
• Business activity
rises at fastest rate
since March
• Commercial work
picks up for first time
in 6 months
• Suppliers continue to
pass on higher
imported raw
material costs
Office for National Statistics
Economic Commentary January 2017
• The initial ONS data show the economy ended 2016 with steady
growth of 0.6% for the third consecutive quarter
• Construction remained broadly unchanged over the year as a whole
Office for National Statistics
Construction Output 3 monthly
The underlying pattern as suggested by the 3 month on 3 month
movement shows a slight contraction of 0.1%.
http://visual.ons.gov.uk/dashboard/
Trends to consider: May act as an indicator of how confident enterprises
are in investing in buildings and the infrastructure, as longer-term assets.
Updated: 11 January 2017
Office for National Statistics
7b CONSTRUCTION OUTPUT: VOLUME NON-SEASONALLY ADJUSTED GROWTH RATES
(£Million)
New Housing
Total
Housing
Other New Work
All New
Work
Repair and Maintenance
All Repair and
Maintenance All Work
Period
Public Private Infras-tructure
Excluding Infrastructure HousingNon-
Housing
R&MPublic
Private
Industrial
Private
Commercial Public Private Total
LATEST MONTH ON
PREVIOUS MONTH
OCT 2016 370 2,389 2,758 1,436 812 343 2,327 7,676 549 1,540 2,089 2,015 4,103 11,780
NOV 2016 389 2,342 2,732 1,510 883 330 2,235 7,690 551 1,612 2,163 1,950 4,113 11,803
% CHANGE 5.1 -2.0 -0.9 5.2 8.7 -3.8 -4.0 0.2 0.4 4.7 3.5 -3.2 0.2 0.2
LATEST MONTH ON A
YEAR EARLIER
NOV 2015 341 2,062 2,403 1,487 837 374 2,153 7,254 624 1,569 2,193 2,016 4,208 11,462
NOV 2016 389 2,342 2,732 1,510 883 330 2,235 7,690 551 1,612 2,163 1,950 4,113 11,803
% CHANGE 14.1 13.6 13.7 1.5 5.5 -11.8 3.8 6.0 -11.7 2.7 -1.4 -3.3 -2.3 3.0
LATEST 3 MONTHS ON
PREVIOUS 3 MONTHS
JUN 2016 - AUG 2016 1,120 6,977 8,097 4,141 2,683 1,026 6,681 22,630 1,664 4,493 6,157 6,022 12,179 34,808
SEP 2016 - NOV 2016 1,134 7,019 8,153 4,374 2,582 1,018 6,902 23,029 1,672 4,679 6,351 5,981 12,331 35,361
% CHANGE 1.3 0.6 0.7 5.6 -3.8 -0.8 3.3 1.8 0.5 4.1 3.2 -0.7 1.2 1.6
LATEST 3 MONTHS ON
A YEAR EARLIER
SEP 2015 - NOV 2015 1,048 6,267 7,315 4,624 2,533 1,140 6,459 22,071 1,917 4,695 6,611 6,129 12,738 34,809
SEP 2016 - NOV 2016 1,134 7,019 8,153 4,374 2,582 1,018 6,902 23,029 1,672 4,679 6,351 5,981 12,331 35,361
% CHANGE 8.2 12.0 11.5 -5.4 1.9 -10.7 6.9 4.3 -12.8 -0.3 -3.9 -2.4 -3.2 1.6
Federation of Master Builders
Published date: 09 January 2017
• 70% of UK builders have seen an increase in material prices due
to the depreciation of the pound
• with additional increases in material prices of 10 to 15% expected as
the new year unfolds
• Anecdotally, construction SMEs are already reporting an increase of
22% in Spanish slate and 20% increase in timber.
• A quarter of all materials used by the UK construction industry are
imported
http://www.fmb.org.uk/about-the-fmb/newsroom/70-of-builders-report-material-price-hikes
NACF Heat Maps
NACF Heat Maps
NACF Heat Maps
NACF Heat Maps
Actions from major national contractor
as a result of Brexit
January 2017
• Engaging with the supply chain to establish any concerns regarding
labour
• Identifying materials sourced outside the UK and the additional costs
due to fall in the value of sterling
• Seeking alternative materials where necessary
Actions from 2nd major national contractor
as a result of Brexit
January 2017
• Work closely with supply chain to monitor cost increases on imported
materials – to be honest this is quite negligible at the moment as big
cost items are sourced from national suppliers/manufacturers.
• Our procurement team feel that Brexit is being used as a reason to
talk prices up at the minute. One example are the SFS
Manufacturers- of the 6 main players, 4 are trying to increase costs
and two are saying there’s no change.
Summary
• After a drop in construction activity prior to the vote on 23 June 2016
by 31 December 2016 activity was similar to first quarter figures
• Would this have been better or worse with a remain vote?
• The drop in markets appears to be a result of responding to the fear of
the vote itself rather than the actual risk associated with a remain or
leave win. In all likelihood if the remain vote had won the 2016
outturn figures would be higher due to better exchange rates
Looking forward
• Increased imported raw material costs due to changing exchange
rates is likely to continue for the foreseeable future
• The FMB estimate that a quarter of all materials used by the UK
construction industry are imported. We recommend that Clients,
designers and contractors take this into account in their
projects.