talking trade OPPORTUNITIES – BUT WE NEED TO ACT NOW
Will Jones, chief operating officer of BHETA, provides an update on the latest developments at the British Home Enhancement Trade Association
which was Covid-19. I speculated at the time that when the time came for business to look forward again as opposed to dealing with the immediate crisis, we would find ourselves in a somewhat changed world. Some different ways of doing business perhaps, some inventive new ways of consumer engagement, an increased reliance on digital communication and online sales, all of which if handled well would contain opportunities for the future. The very fact that we can now look again at
T
‘normal’ measures of our economic position as distinct from the weekly Covid-19 statistics BHETA issued throughout lockdown suggests that we are moving into recovery mode. The figures here, sourced from across the UK economic spectrum suggest something similar, perhaps best summarised as a ‘partial recovery’ from the depths of the economic crisis. We are seeing a mixture of upturn on a
he last time BHETA issued its monthly economic snapshot was in March and the nation was staring into the unknown
previously dire downturn and a lessening in the rate of decline in key areas like new order intakes and employment levels. So maybe not quite the immediate V-shaped recovery we all hoped, but certainly grounds for positive thinking and positive action to drive the industry back in the right direction. The upturn in retail sales of 12 per cent
across the board is particularly encouraging because it includes a strong increase in sales of household goods at 42 per cent. Manufacturing production rose slightly for the first time in four months and gross domestic product (GDP) grew by 1.8 per cent in May, albeit following two months of record falls. The statistics reflect two significant shifts in consumer focus, both of which can be turned to sustainable opportunity if we act quickly. The first is renewed significance of home-related projects such as home baking, which is more than just a consequence of enforced cooking and eating in. According to Google Trends, interest in baking reached 500 per cent growth in March and while it has since declined as a
search term, it is still about double the pre- Covid rate and the step-change in UK searches for mixing bowls and baking trays continues. The other significant economic outcome of the crisis is the considerable increase in pace of the switch from shops to websites. In both cases, and according to another of BHETA’s data partners, GlobalData, these trends are likely to continue.
So, despite the continued pressure on the economy, which is clearly enormous, taking these two factors together is probably the nearest thing to a silver lining the sector can reasonably expect. Both suppliers and retailers need to do everything they can to sustain consumer interest in ever more ambitious cooking and baking projects; and they need to ensure they can reach customers online as well as via bricks and mortar.
• For more information about BHETA, contact the Member Services Team on 0121 237 1130 or visit the BHETA website
www.bheta.co.uk
Consumer Price Index The Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate was 0.8% in June 2020, up from 0.7% in May 2020. The largest contribution to the CPIH 12- month inflation rate in June 2020 came from recreation and culture (0.32 percentage points).
Retail Sales Retail sales volumes partly rebounded in May 2020 with an increase of 12.0% when compared with the record falls experienced in the previous month, but sales were still down by 13.1% on February before the impact of the pandemic. Non-food stores provided the largest positive contribution, aided by a strong increase of 42.0% in household goods stores, with the opening of DIY stores.
Mortgage Approvals The number of mortgages approved for house purchase in the United Kingdom plummeted to just 9,273 in May 2020, the lowest level since the series began in 1993 and well below market expectations of 25,000.
UK House Price Index Updates to the UK House price index have been temporarily suspended due to the Pandemic. UK
average house prices increased by 2.1% over the year to March 2020, up from 2.0% in February 2020. Average house prices increased over the year in England to £248,000 (2.2%), Wales to £162,000 (1.1%), Scotland to £152,000 (1.5%) and Northern Ireland to £141,000 (3.8%).
Labour Market In June 2020, the number of employees in the UK on payrolls is down around 650,000 compared with March 2020. The largest falls were seen at the start of the pandemic and while the number of payroll employees is still falling the decline is slowing.
Construction Output Construction output grew by a record 8.2% in the month-on-month all work series in May 2020 following the record decline of 40.2% in April 2020; the level of construction output is now down 38.8% on February 2020 before the impact of the coronavirus (COVID-19) pandemic.
Commodity Prices Energy prices rose 14.5% in June, following a 32.25 spike in May. Despite the recent gains, prices remain 37% below end-2019 levels. Non energy prices rose sharply in June (up 0.4%), led by metals and minerals (up 8.3%).
Purchasing Managers' Index (PMI) The IHS Markit/CIPS UK Manufacturing PMI was confirmed at 50.1 in June 2020, up from 40.7 in the previous month, suggesting there was a stabilisation in operating conditions following the recent steep downturn caused by the coronavirus pandemic. Manufacturing production rose slightly for the first time in four months, while new order intakes and employment fell at softer rates.
Reuters FX Analysis The British pound fell after the economy rebounded in May at a much slower-than-expected pace, calling into question forecasts for a V-shaped recovery. Sterling was last down 0.3% at $1.2520 and 0.5% against the euro at 90.79 pence.
1 GBP = 1.10 EUR 1 GBP = 1.25 USD.
Gross Domestic Product (GDP) Monthly gross domestic product (GDP) grew by 1.8% in May 2020. Despite this, the level of output did not recover from the record falls seen in March and April 2020 and has reduced by 24.5% compared with February 2020, before the full impact of the coronavirus.
July/August 2020
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