talking trade WILL JONESHousewares Sector Director of the British Home Enhancement Trade Association (BHETA) It’s all about volumes versus value

the BHETA GfK Quarterly POS Index. We are providing BHETA members with quarterly


updated retail point-of-sale data, delivered from GfK’s network of major UK retailers. The statistics are broken down into BHETA’s four sector categories of home improvement (DIY), garden, housewares and small electricals, and then further broken down by product groups. As part of this relationship, Kelly Whitwick, GfK’s UK

retail lead, spoke at BHETA’s housewares networking forum on November 1 and discussed some of the findings of GfK’s latest consumer confidence survey. Pointing out how pessimistic Brits are compared with other nations, she explained that fears about the macro economic situation are holding consumers back - despite a relatively positive position on personal ability to spend. So there it is in a nutshell. We can look at the

HETA has entered into a great joint enterprise with GfK, one of the world’s leading research companies, to produce

statistics and see shifts that can usually be attributed to seasonality, weather and one-off positives like World Cups and royal weddings. Yet we know that the spending that drives growth, and the economy as a whole, may not really gain traction until some of the big and obvious uncertainties are resolved - one way or another. In BHETA’s Economic Snapshot for October (see

below), as the extraordinary summer finally gave way to autumn, food and alcohol, transport and recreation prices dropped, electricity and gas prices increased, and there was an increase in gifting purchases as we entered the festive season. The underlying trend is all about volumes versus

value, however. In September, the quantity bought declined by 0.8% compared with August. Online sales as a proportion of all retailing fell slightly and British banks approved 38,505 mortgages for new house purchases, below market expectations of 39,000. That’s the lowest reading in six months and

down by 6.7% from a year earlier. In contrast, the headline when focusing on the

topline categories in the home improvement and enhancement sectors is that we are seeing value growth more or less across the board, even if volumes are down. It seems consumers are not put off by premium price points but are seeking out the best, as opposed to the most. The most significant topline growth came from air

treatment (up by about 20% in value terms compared with the benchmarked index of January - December 2017). Some of this can be put down to the summer’s hot weather. But it’s also a response to the increasing importance of comfort and simplicity in terms of products most purchased these days. Another winner is barware, which is sustaining its positive summer. It will be interesting to see how much of this growth can be maintained through the autumn and, more importantly, into the festive period.

Consumer Price Index September 2018 The largest downward contribution came from food and non-alcoholic beverages where prices fell between August and September 2018 but rose between the same two months a year ago. Other large downward contributions came from

transport, recreation and culture, and clothing. Partially offsetting upward contributions came from increases to electricity and gas prices. The Consumer Price Index 12- month rate was 2.4% in September 2018, down from 2.7% in August 2018.

Retail Sales September 2018 In the three months to September 2018, the quantity bought in retail sales increased by 1.2% compared with the previous three months, with strong sales in ‘other stores’ and online retailing. The increase of 3.9% for the quantity of goods bought

in ‘other stores’ for the three months to September 2018 was the largest overall contributor to the growth in total retail sales, due largely to strong growth in watches and jewellery stores. In September 2018, the quantity bought declined by

0.8% compared with August 2018, due mainly to a large fall of 1.5% in food stores; the largest decline in food store sales since October 2015. Online sales as a proportion of all retailing fell slightly to 17.8% in September 2018 from the 18% reported in August 2018, yet food stores and clothing stores both reported record proportions of internet retail at 5.8% and 18.2% respectively.

Mortgage Approvals September 2018 British banks approved 38,505 mortgages for new house purchase in September of 2018, less than a downwardly

revised 39,241 in August and below market expectations of 39,000. It is the lowest reading in six months and down by 6.7% from a year earlier. Approvals of loans secured on dwellings for re-mortgaging fell to 27,874 from 30,838 in August, and the number of approvals for other purposes declined to 8,613 from 8,938. Net mortgage lending decreased by £1.550 billion in September, compared with £1.671 billion in August.

House Price Index August 2018 The average UK house price was £233,000 in August 2018. This is £7,000 higher than in August 2017 and £1,000 higher than last month. On a non-seasonally adjusted basis, average house prices in the UK increased by 0.2% between July 2018 and August 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (July 2017 and August 2017). On a seasonally adjusted basis, average house prices in the UK increased by 0.3% between July 2018 and August 2018.

Labour Market June - August 2018 Estimates from the Labour Force Survey show that between March to May 2018 and June to August 2018 the number of people in work was little changed, the number of unemployed people decreased but the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) increased. There were 32.39 million people in work - little

changed compared with March to May 2018 but 289,000 more than a year earlier. The employment rate was 75.5%; lower than for March

to May 2018 (75.7%) but higher than for a year earlier (75.1%). There were 1.36 million unemployed people:

47,000 fewer than for March to May 2018 and 79,000 fewer than for a year earlier.

Construction Output

August 2018 Construction output continued to recover following a relatively weak start to the year, increasing by 2.9% in the three months to August 2018. The three-month on three- month growth was driven by both repair and maintenance and all new work which increased by 2.8% and 2.9% respectively. Construction output declined by 0.7% between July

and August 2018, driven by falls in both repair and maintenance and all new work which decreased by 0.6% and 0.8% respectively.

Commodity Prices September 2018 Commodity prices were mixed in September, with energy commodities rising 5% and non-energy commodities falling 1.9%. Agriculture prices remained weak (down 2.7%), led by a 5.3% drop in grains. Precious and base metals fell around 1%.

Foreign Exchange Analysis Reuters - September 25 2018 The pound rose above $1.29 on September 25 after a show of support for Prime Minister Theresa May from her Conservative Party dampened fears of an immediate leadership challenge over her Brexit strategy.

1 GBP = 1.13 EUR 1 GBP = 1.29 USD

IE Source: BHETA Economic Snapshot – October 2018

December 2018 | 41

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