ECONOMIC SNAPSHOT


SUNSHINE UPS THE FIGURES, BUT DOES IT STAND SCRUTINY?


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 sales figures HETA home


impr ovement and garden sector director


Paul


Grinsell says: “Latest retail look particularly


encouraging on the face of it with sales up 2.1% in the three months to June, which is the biggest increase for over three years.


Drill down


into the detail however and the weather which has been such a positive overall may not have done home improvement quite so many favours – in fact it may be masking more serious issues.


“While food, drink and garden


leisure were basking in the heat of boosted purchasing, many non- food retailers saw a 0.5% decline in the quantities of goods purchased. Even the seemingly unstoppable online retail hike was for once rather static. In amongst all this, one operator who was apparently celebrating the warm conditions was Kingfisher, reporting May to July like for like sales growth of 1.6%, as group sales figures rose to £3.26bn.


“Strip out the contribution made by barbecues and garden furniture, however and sales at B&Q actually continued to fall, something also reflected over the water at Castorama in France. Not even the Homebase situation with its 42 store closures and the potential loss of around 1500 jobs is predicted to make any great difference in terms of a resulting B&Q upturn. “The moral of the story is that yet again we are seeing unusual or one-off phenomena like freaky weather and a summer of sport influencing our short- term view, while underlying issues continue to need addressing.


To take the


B&Q example further, it is to be hoped that the new investment of £100 million as part of plans to lower everyday prices has a more fundamentally positive effect. “Talking of which, where strategic thought turns away from short term uplifts and focusses on the actual changes in consumer behaviour and the consequent structure of our industry, then we see positives


14 DIY WEEK 24 AUGUST 2018


that may actually be more real and more reliable. star performer course Screwfix.


Kingfisher’s


in the UK is of Trade-focussed


operations like this and also like Toolstation have challenged the way in which consumers access the home improvement market and they continue to pull in more business – whatever the weather. “In the end it’s structural change


that will fundamentally boost this sector not sunshine – enjoyable although that is while it lasts!”


Consumer Price Index – July 2018


The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.3% in June 2018, unchanged from May 2018.


Rising prices for motor fuels and domestic gas and electricity produced


the largest upward


contributions to change in the rate between May and June 2018. Falling prices for clothing and games, toys and hobbies provided the largest downward effects.


The Consumer Prices Index (CPI) 12-month rate was 2.4% in June 2018, unchanged from May 2018


Retail Sales – June 2018 In the three months to June 2018, the quantity bought in retail sales increased by 2.1%; the largest increase since February 2015, with growth across all main sectors. Food stores saw the strongest


three-month on three-month growth since May 2001 at 2.2%, with feedback from supermarkets suggesting


that the continued


good weather and World Cup celebrations had encouraged food and drink sales.


While hot weather and World Cup celebrations increased food store sales,


it was suggested by


retailers that these factors resulted in a decrease in footfall in non- food stores; which, along with non- store retailing, resulted in a monthly decline of 0.5% in the quantity bought.


Online sales as a total of all retailing remained unchanged at


18.0%; online spending in clothing and footwear stores continued to achieve new record proportions of online retailing, for the fourth consecutive month, at 17.5%.


Mortgage approvals – May 2018 The number of mortgages approved for house purchase in the United Kingdom increased to 64.526 in May 2018, the most since January from an upwardly revised 62,941 in the previous month and above market consensus of 62,200. Mortgage lending increased by


GBP 3.86 billion in May, from a downwardly revised 3.79 billion gain in April and exceeding market expectations of GBP 3.73 billion.


House Price Index – May 2018 Average house prices in the UK have increased by 3.0% in the year to May 2018 (down from 3.5% in April 2018). This is its lowest annual rate since August 2013 when it was also 3.0%. The annual growth rate has slowed since mid- 2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. This drop in UK house price driven


growth is in work, 137,000 more than for


December 2017 to February 2018 and 388,000 more than for a year earlier. The employment rate was 75.7%, higher than for a year earlier (74.9%) and the highest since comparable records began in 1971.


Construction Output – May 2018 Construction output continued its recent decline in the three-month on three-month series, falling by 1.7% in May 2018; representing the third consecutive decline in this series. The three-month on three-month


decrease in construction output was driven predominantly by a fall in new work, which also fell for the third consecutive month, decreasing by 2.5% in May 2018. Following a broadly


negative


start to 2018 in the month-on- month series, construction output showed signs of recovery in May 2018, increasing by 2.9% compared with April 2018. The month-on- month growth in construction output was in part driven by the recovery of private housing repair and maintenance work, which grew 7.3% in May 2018 following a weak start to the year.


mainly by a


slowdown in the south and east of England. The lowest annual growth was in London, where prices decreased by 0.4% over the year. This is the fourth consecutive month that London house prices have fallen over the year.


The average UK house price was £226,000 in May 2018. This is £6,000 higher than in May 2017 and unchanged from last month.


UK Labour market – March-May 2018 Estimates from the Labour Force Survey show that, between December 2017 to February 2018 and March to May 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 (economically inactive) also decreased. There were 32.40 million people


Commodity Prices – June 2018 Preliminary


estimates for June


indicate that the index decreased by 0.2% (on a monthly average basis) in SDR terms, after decreasing by 0.5% in May (revised). The rural and base metals subindices increased in the month, while the non rural index decreased.


Foreign Exchange analysis – Reuters July 23 Sterling fell to a three-week low against a resurgent yen on Monday 23rd after the Japanese currency received a boost from reports that the central bank was contemplating scaling back its stimulus. The British currency struggled to hold on to earlier gains against the dollar and fell 0.1% to $1.3115, although the pound was still up from last week’s 10-month lows below $1.30. 1 GBP = 1.12 EUR 1 GBP = 1.31 USD


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