Key Statistics: 22 July 2014

Construction

• The Q2 2014 Construction Market Survey by the Royal Institution of Chartered Surveyors (RICS) suggests that shortages of both labour and materials are increasingly holding back the industry’s growth. 51% and 58% of the surveyors responding to the survey agreed that skills and materials shortages respectively are factors limiting building activity; both of these proportions increased by around 10 percentage points from the first quarter of this year. More respondents now agree that material shortages are a greater issue than financial constraints. More than half reported financial constraints as a limit on activity, but this proportion has been consistently falling in recent RICS surveys.

Economy

• The UK unemployment rate continues to fall at a dramatic pace, according to the latest official Labour Market Statistics. The rate stood at 6.5% in the three months to May, down from 6.6% recorded one month earlier and 7.8% at the same stage a year ago. The rise in employment was due mainly to hiring by companies, whereas until recently people entering self-employment were the main driver of the positive jobs figures. However the same statistical release estimated that average weekly earnings (excluding bonuses) rose by just 0.7% in the three months to May, compared to a year earlier. This was the slowest growth ever seen in records going back to 2001, and contrasts with reports from business surveys of rising salaries and greater difficulties in finding staff. If sustained, this low level of pay growth would be a real constraint on economic recovery.

• UK consumer price inflation rose to 1.9% in the 12 months to June, up from a four and a half year low of 1.5% in May. The rise in the rate was due largely to a dip in the consumer price Index in June last year; the index rose only modestly between May and June this year and as such does not suggest that inflation is set to accelerate further.

• A survey by the Institute of Directors suggests that having fallen back relative to inflation over the last couple of months, earnings will begin to catch back up with rising prices over the next year. Of 1,005 company directors surveyed, 36% intend to at least match inflation when raising pay and a further 29% intend to increase pay at above the inflation rate. However a third of directors are not planning rises of at least the inflation rate, suggesting that overall real earnings are more likely to stabilise than improve rapidly.