BHETA ECONOMIC SNAPSHOT


GLIMMERS OF HOPE, OR IS IT JUST THE WEATHER?


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


the first quarter of 2018 has been anything other than a rough ride for retailers, topped off by March’s extreme weather conditions with the Beast from the East credited at least in part with the recent rise in gas prices! Now, in contrast the sun is shining and while I am hardly about to suggest that things are all about to be perfect again – there are far too many uncertainties around for that – April’s figures do show a few slight positives and not just in the garden industry. “April’s retail sales values (ex-fuel)


B


rose 1.3% from the previous month and are 3.4% higher than April 2017. Add to that the fact that unemployment is at a record low and we have an unexpected fall in inflation to its lowest level since the beginning of last year and there ought to be some room for optimism. We are after all just inching back into real wage growth.


“Despite these statistics, however, the market feels flat at best. Commodity prices are rising, there is no great upturn in the housing market and big High Street names disappearing or at least announcing cutbacks


does not exactly


the mood. According to the CBI’s monthly distributive trades survey, in the year to April 31% of retailers reported sales growth compared to 33% reporting a decline, which perhaps sums up the situation. “The most


recent figures show


poorer trading evident in department stores and in interior products like furniture and carpets. Some growth was apparent in grocery; and in DIY and garden as the season kicked in. Unsurprisingly, it was online retail that was most positive, yet again highlighting the need for all retailers to invest in the technology to create convincing omnichannel offers, which blend instore experience with online convenience and speed. “Moreover, it is this fundamental need for changes in the retail model


12 DIY WEEK 15 JUNE 2018 HETA home


impr ovement and garden sector director Paul Grinsell says: “No one could argue that


that is evident in the feeling of disparity between many of the official figures and the atmosphere in the High Street. While quarterly rentals and the turn of the financial year lie behind some of the retail headlines, others are equally attributable to directors deciding to ‘grasp the nettle’ and close unprofitable stores. In other words, much of what is happening reflects ongoing structural changes in retail as well as present sales performance. “In conclusion then, if this is true, then maybe there is room amongst the painful decisions and continued pressure for that little glimmer of hope for improving times. Again, to quote the CBI survey, many respondents remain positive about the coming months compared to the same time last year.


It will be interesting to


see what two Bank holidays; warm weather and a royal wedding will have done to May’s figures.”


Consumer Price Index – April 2018


lift


The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.2% in April 2018, down from 2.3% in March 2018. The rate has fallen back from a recent high of 2.8% during autumn 2017 resulting in the April 2018 figure being the lowest observed since January 2017. The largest downward contribution to the change in the rate came from air fares, which were influenced by the timing of Easter. Meanwhile, rising prices for motor fuels produced the largest, partially-offsetting, upward effect. As a result, the Consumer Prices Index (CPI) 12-month rate was 2.4% in April 2018, down from 2.5% in March 2018.


Retail Sales– April 2018 In April


2018, the quantity of


goods bought in the retail industry remained relatively flat with a slight increase of 0.1% in the three-month on three-month movement. Department stores showed


a different monthly picture to all other sectors as the only sector to report a fall in quantities bought,


at negative 0.9% in April following strong online sales in March. Petrol sales reported the largest recovery in April, with a growth of 4.7% compared with a decline of negative 6.9% in the previous month as road closures affected travel in March. Removing the monthly volatility, combined


the two months of


March and April compared with the same periods a year earlier showed a general slowdown to growth at 1.3% for March and April 2018 when compared with 2.9% for March and April 2017. Online sales as a proportion of all retailing continued to grow year-on-year at 17.3% in April 2018, in comparison with 16.1% in April 2017; with food and clothing stores achieving record online proportions.


Mortgage approvals – March 2018 The Bank


of England reported


that mortgage approvals for house purchases fell back to a 2018-low in March and were at the second lowest level (after December 2017) since August 2016.


The number of mortgages


approved for house purchase in the United Kingdom fell to 62,914 in March 2018 from a downwardly revised


63,781 in the previous month and below market consensus of 63,000. There seems little evidence that cutting of stamp duty for first-time buyers in November’s Budget has yet provided a noticeable boost to housing market activity.


House Price Index – March 2018 Average house prices in the UK have increased by 4.2% in the year to March 2018 (unchanged from February 2018). The annual growth rate has slowed since mid- 2016 but has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. Average house prices in the UK decreased by 0.2% on the month.


Labour Market – January-March 2018


Estimates from the Labour Force Survey show that, between October


to December 2017 and January to March 2018, the number of people in work increased, the number of unemployed people decreased and the number of people aged from 16 to 64 years not working and not seeking or available to work also decreased. There were 32.34 million people


in work, 197,000 more than for October to December 2017 and 396,000 more than for a year earlier. The employment rate was 75.6%, higher than for a year earlier (74.8%) and the highest since comparable records began in 1971.


Construction output – March 2018 Estimates from the Labour Force Survey show that, between October to December 2017 and January to March 2018, the number of people in work increased, the number of unemployed people decreased and the number of people aged between 16 and 64 years who were not working and not seeking or available to work also decreased. There were 32.34 million people in work, 197,000 more than for October to December 2017 and 396,000 more than for a year earlier. The employment rate was 75.6%, higher than for a year earlier (74.8%) and the highest since comparable records began in 1971.


Commodity prices – March 2018 Commodity prices mostly rose in April, led by energy, which surged 8.2%. Non-energy prices rose 1.8%. Grains rose 5.1%, metals and minerals 2.3% and beverages 2.4%. Precious metals inched up 0.7% while fertilisers fell 0.7%.


Foreign exchange analysis – Reuters – May 23, 2018 British inflation fell unexpectedly in April, according to


figures on


Wednesday 23rd April that added to doubts about when the Bank of England will raise interest rates again and pushed sterling to its lowest level against the dollar this year.


1 GBP = 1.13 EUR 1 GBP = 1.33 USD


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