talking trade
Recovery Is On the Horizon W
hile some of the latest economic
statistics show some evidence of being slightly skewed by buying decisions being made ahead of BREXIT, in general the figures show a positive direction as the nation recovers from the impact of the first Covid- 19 lockdown. With retail volumes in growth for the sixth consecutive month and October 2020 GDP now 23.4% higher than its April 2020 low (albeit still 7.9% below February
2020), there are some positive indicators. Admittedly some of these measures precede the latest pandemic restrictions. We can already see November retail sales volumes decreasing by -3.8% compared to October because of Lockdown 2 and anecdotal evidence is suggesting that 2021 may well get off to a tough start due to the current situation. The other salutary output of the current statistics is that the number of payroll employees has fallen by 819,000 since February 2020. With overall sales remaining above their pre-pandemic levels, however, there is still a positive economic direction. But the key point for the housewares sector
Viewpoint from Will Jones, Chief Operating Officer of the British Home Enhancement Trade Association (BHETA)
is just how much purchasing linked to the home is standing up to all pressures. House prices are up to record levels, mortgage approvals are up – to the highest level since September 2007! While the January lockdown will of course be a challenge, online channels and shops deemed essential will continue to contribute massively to positive figures. In other words, we are seeing recovery, but
we are also seeing significant change in the economic structure we were used to before the pandemic – and the imperative is to adapt. For further information, visit
www.bheta.co.uk or contact the BHETA Member Services Team on u07946 078566
The last months of 2020 saw the UK continue to recover from the Covid-19 first lockdown, with retail volumes growing for six consecutive months. All statistics linked to spending on the home have been resilient, with average UK house prices achieving a new record high in October of £245,000 and the most mortgage approvals in a month since September 2007. The January lockdown will stifle the wider
recovery and put strain on ‘non-essential’ retailers but demand looks set to remain strong for home- related products through online channels and ‘essential’ shops.
Retail Sales In November, retail sales volumes decreased by -3.8% when compared with October as many stores ceased trading following government guidance during the pandemic. Despite the monthly fall, overall sales remain above their pre-pandemic levels. The year-on-year growth rate in the volume of retail sales increased by 2.4%, with businesses suggesting that consumers had brought forward Christmas spending.
Gross Domestic Product (GDP) GDP estimates for October 2020 are subject to more uncertainty than usual as a result of the challenges we faced estimating GDP in the current conditions. October 2020 GDP is now 23.4% higher than its April 2020 low. However, it remains 7.9% below the levels seen in February 2020, before the full impact of the coronavirus pandemic.
Mortgage Approvals The number of mortgage approvals for house purchases in the UK increased to 105,000 in
January/February 2021
November, the highest level since August 2007 and well above market expectations of 82,500. The recent strength in approvals has almost fully offset the significant weakness earlier in the year.
Construction Output Construction output grew by 1.0% in the month- on-month all work series in October, because of increases in both new work (0.3%) and repair and maintenance (2.3%). The level of construction output in October was 6.4% below February 2020, with only infrastructure having recovered above this pre-lockdown level of output.
Purchasing Managers Index
The IHS Markit/CIPS UK Manufacturing PMI increased to 57.3 in December from 55.6 in November. The reading pointed to the strongest expansion in factory activity since November 2017. New orders expanded at the fastest pace since August, supported by a temporary boost to purchasing ahead of the Brexit deadline, while stocks of purchases were accumulated to the greatest extent since April 2019.
UK House Price Index UK average house prices increased by 5.4% over the year to October 2020, up from 4.3% in September, to stand at a record high of £245,000; this is the highest annual growth rate the UK has seen since October 2016. Average house prices increased over the year in England to £262,000 (5.4%), Wales to £176,000 (5.8%), Scotland to £163,000 (6.0%) and Northern Ireland to £143,000 (2.4%).
Consumer Price Index Early estimates for November suggest that there is a slight drop over the month in the number of payroll employees in the UK. Since February 2020, the number of payroll employees has fallen by 819,000; however, the larger falls were seen at the start of the pandemic. The number of redundancies reached a record high in August to October although the weekly data show that while the level remains high there was a slight decrease in October.
Reuters FX Analysis The pound strengthened against the Dollar in recent months to $1.36 whilst the Euro rate has remained broadly flat around 1.10 Euro. 1 GBP = 1.10 EUR 1 GBP = 1.36 USD 7 Jan
Labour Market The UK employment rate in the three months to September was estimated at 75.3%, 0.8 percentage points lower than a year earlier and 0.6 percentage points lower than the previous quarter. The UK unemployment rate in the three months to September was estimated at 4.8%, 0.9 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter.
Commodity prices Commodity prices rose in October, with energy prices rising 0.5% and non-energy commodities rising 1.5%. Food commodities rose sharply, led by oils and meals (6.9%) and grains (3.4%). Precious metals fell 1.9% while base metals rose 1.3%.
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