ECONOMIC SNAPSHOT


BREXIT STOCKPILING AS CAUSE FOR CONCERN


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


House Price Index Average house prices in the UK increased by 1.4% in the year to March 2019, up from 1.0% in February 2019. However, over the past 3 years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.


Labour Market – January-March 2019


The UK employment rate was estimated at 76.1%, higher than for a year earlier (75.6%) and the joint- highest figure on record. The UK unemployment rate was estimated at 3.8%; it has not been lower since October to December 1974.


are up overall, as are construction figures, and employment remains at its highest since 1974. Lurking alongside these statistics is another - the PMI Index - and the situation that reveals is concerning, to say the least. The UK Manufacturing Purchasing Managers’ Index fell to 53.1 in April 2019 from March’s 13-month high of 55.1. With Brexit now pushed back, the pace of stockpiling eased off significantly and new export business contracted at the second steepest pace in 4.5 years.


B For some while the quarterly CBI


SME Trends Survey has reflected that the stockpiling of raw materials and finished goods were at record highs. In terms of the consequences, the predictions were bleak. In a survey of 252 SME manufacturers, growth in output volumes slowed to its weakest in one-and-a-half years, with production was expected to be flat over the coming quarter. Domestic orders were also flat over the quarter and export orders grew only slightly. Both were expected to fall. The issue is that, ahead of Brexit, manufacturers raised stocks of raw


10 DIY WEEK 14 JUNE 2019 HETA chief


operating officer Will Jones says: “Just as in April, the May figures confirm many positives. Retail sales


materials and finished goods at the fastest rates in the CBI survey’s history. Stocks of raw materials (+33%) and finished goods (+18%) both grew at their fastest pace since October 1988. Stocks of work in progress were also raised significantly – and all because of the Westminster deadlock. Such actions are no small matter in terms of the strain they put on resources and, while 22% of firms said they were more optimistic regarding their own business situation, 33% said they were less optimistic, giving a rounded balance of -12%. Optimism about export prospects for the year ahead fell sharply again (-25%). Now, as predicted, British factories have suffered the biggest fall in orders since late 2016, gearing down from their rush to stockpile before the original Brexit deadline and boding badly for the economy in the second quarter. The Confederation of British Industry said, on Tuesday, that its monthly order book balance fell to -10 from -5 in April; below all forecasts in a Reuters poll of economists, and its lowest level since October 2016. Overall, the survey suggested the boost to manufacturing from the push to stockpile was fading fast and factories are now lumbered with the greatest stocks of finished goods since 2009. The predictions are that the


manufacturing sector, in particular, and the economy overall, will take a hit in the second quarter, at least while some of the stockpiling that occurred in the first quarter is resolved. It is a serious concern.


Consumer price Index


The Consumer Prices Index (CPI) 12-month rate was 2.1% in April 2019, up from 1.9% in March 2019. Rising energy prices and air fares, which were influenced by the timing of Easter, produced the largest upward contributions to change in the rate between March and April 2019.


Retail Sales In the three months to April 2019, the quantity of goods bought in retail sales increased by 1.8% when compared with the previous three months, with strong growth in non- store


retailing, which reached a


record high of 9.4%. Online retailers selling clothing items were the driver to this growth.


Mortgage Approvals There was


a sharp increase in


mortgage approvals in April as home owners continued to take advantage of low mortgage rates. There were 65,781 mortgages approved during April 2019, up 2.7% compared to the same month in 2018.


Construction Output - September 2018 Construction output increased by 1.0% in Quarter 1 2019; this increase was driven


by repair


and maintenance output, which increased by 2.9%. The rise was driven by increases in both private housing repair & maintenance and non-housing repair & maintenance.


Commodity Prices Energy prices were down 8% in Q1 2019 with sharp falls in coal and natural gas prices, while oil prices have risen steadily since the start of the year. Non-energy prices were up in the first quarter.


Purchsing Managers’ Index The UK Manufacturing PMI fell to 53.1 in April 2019 from March’s 13-month high of 55.1. With the deadline for Brexit now pushed back to October 31st, the pace of stockpiling eased off significantly and new export business contracted at the second steepest pace in 4.5 years.


Foreign exchange analysis Sterling plunged again in early London trading on Thursday, April 23, as pressure mounted on Prime Minister Theresa May to name a date for her departure. 1 GBP = 1.13 EUR 1 GBP = 1.26 USD


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