Key Statistics: 23 Sept 2014

Construction

• Private housing and commercial work are fuelling rising construction costs, according to The Output Price Index for New Construction published by the Department for Business Innovation & Skills (BIS). Output prices for all new work rose in Q2 to 6% higher than a year earlier, and 1.5% higher than the first quarter of the year. This was fuelled by the private housing (7.2% year-on-year and 2% quarter-on-quarter) and commercial (9% and 2.5%) sectors. The Repair and Maintenance index was more muted, rising by 1.4% y-oy and 0.4% q-on-q due largely to rising private housing R&M costs.
• KPMG have called current construction margins and cash levels “unsustainable” based on research into the accounts of 14 tier one contractors. They found that net cash balances have declined to just over half of peak levels seen in 2010, with average operating margins having slid from 2.8% to 1.2% over the same period.

Economy

• Financial markets had a relatively minor response to the announcement of the ‘No’ vote. Financial institutions based in Scotland such as RBS and Lloyds, which would have been forced to move their headquarters to England in the case of a ‘Yes’ vote, saw their share prices rise, while SSE also showed strong gains on the back of the result. However the overall FTSE 100 index as a whole rose modestly, perhaps reflecting the low probability of a ‘Yes’ vote assigned by investors in the run-up to the poll.
• The value of the pound rose overnight as the result became clear but then fell back with analysts citing continuing uncertainty due to promises of constitutional reform and further devolution to Scotland made by all three main Westminster parties.
• The UK unemployment rate fell to 6.2% in the three months to July this year, the lowest level since the end of 2008, according to the latest ONS estimates. This is down from 6.6% in the three months to April and 7.7% a year ago. In fact the 1.5 percentage point fall over the last year is the quickest fall in the unemployment rate seen in the figures stretching back to 1992. The employment rate over the same period was 73.0%, this has remained largely unchanged over the last six months but has increased by 1.4 percentage points since this stage a year ago.
• The ONS estimates that wage growth remained anaemic in the three months to July. Average weekly earnings excluding bonuses rose by 0.7% on a year earlier, on a par with the previous month’s reading as the weakest growth seen in records going back to 2001. 
• Demand for British factory exports fell to a 21 month low in September, according to a monthly CBI survey of manufacturers. The export order balance fell sharply from -3 in August to -24, below the long run survey average, most likely due to renewed weakness in the euro area. However expectations for output over the next three month remained positive, dipping from +31 in August to +27 in September but remaining well above the long term average of +7.