Official estimates confirm the UK economy has edged out of recession but, with prospects for growth in the fourth quarter looking flat at best, consumer confidence has dipped again.
The gloom is not quite back to the levels of a year ago, but the confidence index compiled by GfK/NOP for the European Commission is at its lowest for six months. Significantly for furniture manufacturers, and for homebuilders, the measure, which asks respondents about major purchase intentions, dropped two points in October to one point lower than 12 months ago.
The CBI survey of retailers, which covers the first half of October, points to sales growth in some sectors, with furniture and carpet businesses reporting strong year-on-year increases. The British Retail Consortium says that October confirmed the better trend which began in September for furniture and flooring sales. Bedroom furniture in particular responded well to promotional activity.
However, official estimates suggest a yearly 1.3% decline in retail sales volumes of furniture and lighting in October, with a 1% increase in the value of purchases.
Activity among raw material and product buyers in Britain’s construction companies fell for the fifth month in a row in October and at a slightly faster pace than previously, while input price inflation also accelerated. The purchasing managers index (PMI) from Markit/CIPS also indicates that overall activity rose slightly compared with September; there was less residential and commercial work but more civil engineering projects.
Official estimates indicate a 2.6% fall in the volume of construction output in the third quarter of 2012 and a decline of 11.3% compared with the same quarter of 2011.
Figures for September reveal a 13.1% fall in total output from a year earlier; home building bounced by 5% but is 12% below a year ago.
Although the Construction Products Association’s (CPA) latest forecast for overall construction shows a contraction both this year and next, the outlook for the housing sector is more upbeat. The number of new private home starts is expected to drop 3% in 2012 but to expand by 6% in 2013, and then strengthen to almost double-digit growth in 2016 with 136,400 starts projected. However, the public housing sector is not forecast to resume growth until 2014, when a 1% increase will lead on to a growth rate of 4% in 2016 with 20,500 starts.
The CPA expects the output volume of industrial construction work to increase 0.6% this year and to rise annually thereafter to the end of the forecast period in 2016. Output of commercial projects will be slower to grow, with annual increases only beginning in 2014.
The downturn in UK manufacturing quickened in October but the CBI forecasts that it will slowly pick up and grow by a modest 2% in 2014
