BHETA ECONOMIC SNAPSHOT


READY FOR THE ‘NEW NORM’?


The latest facts and figures from the British Home Enhancement Trades Association (BHETA) and what they mean for suppliers to the home improvement industry.


B HETA DIY sector


director Paul Grinsell says: “This summer we saw the 52nd consecutive year-on-year volume


increase in retail sales, with non- food and non-essentials among the main contributors to growth.


On


the face of it, this sounds good, notwithstanding a general awareness that sales are becoming harder work to secure. So, I’ve been looking at the forward trends for the market to see if the upward trend is set to continue and the good news is that global reports suggest that it is. The main impression going forward however is one of change – quite fundamental and probably forever.


In short, we


need to be prepared for a ‘new norm’. Unsurprisingly, online retailing


remains one of the big drivers, growing increasingly rapidly over the next five years, having had a relatively slow start in home improvement compared to other market sectors. We will see the beginnings of bricks and mortar fight back however as the market becomes cleverer at re-engaging consumers with instore experience. A combination of project ideas, ‘how to achieve the look’ and a resurgence in both gardening and home improvement as relatively low- cost leisure time activities will draw consumers back into store, where they can touch and feel and enjoy. So, if consumers show signs of going back into store, a key question is which store? The answer is that the so-called discounters should probably start to be referred to collectively with a different term quite soon. For many consumers, discounters have matured into the ’new norm’ and it’s now ABs as much as CDs who are trading down, with many unlikely to trade up again, even when disposable cash is more common than it is now. This sector is now the mainstream and younger, savvy-er shoppers wonder why anyone would shop anywhere else.


10 DIY WEEK 10 NOVEMBER 2017


The implications are massive for our market and owners of mid- range brands, in particular, need to start thinking quickly how much they actually prize their brand equity, if it comes to a choice between that and volume sales.


Consumer Price Index – July 2017


The Consumer Price Index including owner occupiers’ housing costs 12-month inflation rate was 2.6% in July 2017, unchanged from June 2017.


The price of motor fuel continued to fall and provided the largest downward contribution to change in the rate between June 2017 and July 2017. This was offset by smaller upward contributions from a range of goods and services, including clothing, household goods, gas and electricity, and food and non- alcoholic beverages.


Retail Sales – September 2017


The underlying pattern in the retail industry is one of growth; for the three-months on three-months measure, the quantity bought increased by 0.6%.


In September 2017, the quantity bought in the retail industry decreased by 0.8% when compared with August 2017; non-food stores provided the greatest downward pressure following growth in August 2017. Year on year, the quantity bought in the retail sector increased by 1.2%, with non-food (household goods, clothing stores) and non- store retailing all providing growth. Store prices continue to rise


across all store types and are at their highest year-on-year price growth since March 2012 at 3.3% (non-seasonally adjusted). Online sales values increased


year-on-year by 14%, accounting for approximately 17% of all retail spending.


Mortgage Approvals – August 2017


Mortgage lending in the UK rose slightly in August, beating flat expectations as buyers chase low interest rates ahead of an anticipated rise this


Autumn.


But with rising inflation hitting affordability tests, and new rules for buy-to-let landlords due in October, economists predict lending levels will dip towards the end of the year.


UK Finance, a trade association which combines 300 entities including the British Bankers Association and the Council of Mortgage Lenders, today released figures for gross mortgage lending, showing a total in August of £24.2bn, up £1.2bn on July. House purchase approvals from high-street banks also crept up to 41,807 in August, up 11% on the same month last year, when the house market saw a post- referendum slump.


House Price Index – August 2017 Average house prices in the UK have increased by 4.9% in the year to June 2017 (down from 5.0% in the year to May 2017). The annual growth rate has slowed since mid- 2016 but has remained broadly around 5% during 2017.


The average UK house price was £223,000 in June 2017. This is £10,000 higher than in June 2016 and £2,000 higher than last month.


UK Labour Market: June-August 2017 Estimates from the Labour Force Survey show that, between March to May 2017 and June to August 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.


There were 32.1 million people in work, 94,000 more than for March to May 2017 and 317,000 more than for a year earlier.


The employment rate was 75.1%,


up from 74.5% for a year earlier. The unemployment rate was 4.3%, down from 5.0% for a year earlier and the joint lowest since 1975.


Construction Output – August 2017 Construction output contracted by 0.8% in the three month on three month series in August 2017 but remains at relatively high levels. The three month on three month decline in output was due to decreases in both repair and maintenance, which fell 0.6% and all new work, which fell 0.9%. Construction output grew 0.6% month-on-month in August 2017, predominantly driven by a 1.7% rise in all new work.


The month-on-month rise in all new work stemmed from growth in private housing, which grew 2.3% and infrastructure, which increased by 3.6%.


Commodity Prices – September 2017 Energy commodity prices rose 5.4% in September, while non-energy prices rose 1.5%. Food prices rose 1.9%, while beverages fell 1%. Metals and minerals rose 1.4%. Fertilizers registered the biggest gain in September, rising 6.1%.


Foreign Exchange Analysis: Reuters – October 19, 2017 Sterling edged lower ahead of British employment data due next Wednesday that will help determine whether the Bank the England will raise interest rates. The British currency is currently at $1.3175, its lowest point since October 9.


1 GBP = 1.11 EUR 1 GBP = 1.31 USD


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