It was good news on the UK economy from the Office of National Statistic (ONS) this week. A further rise in GDP in the last quarter took annual growth to 2.8%, the fastest expansion since 2007. And according to the ONS, construction is leading the charge away from a double-dip recession, growing 4% from July to September. At the same time, however, Oxford Economics predicts that house prices are set to fall for the rest of this year and into 2011. The recovery thereafter is expected to be slow.
Halifax, Nationwide and the Royal Institute of Chartered Surveyors also predict price falls. The latter also says buyer enquiries have now fallen for four months, the sales-to-stocks ratio has dropped further, and the stock of unsold property has risen to an 18-month high.
Still on the gloom side, the latest survey from the Chartered Institute of Purchasing and Supply finds construction industry confidence at its lowest since March 2009, while accountants BDO’s latest report suggests that sentiment among UK firms generally has dropped to its weakest level since the deepest part of the recession in May 2009.
Meanwhile, the CIPS September survey reveals a slowdown in activity in the home building sector, after 12 months of growth, but reports more activity in the commercial and civil engineering sectors. Overall it suggests that the volume of work in the pipeline is weak.
According to the National House Building Council the number of new home starts it registered in September fell by 9%, however, the total in the year still showed an rise of 10%
So, overall its mixed signals from the building sector, although these more pessimistic forecasts do predate the latest upbeat ONS findings.
Timber exports
On overseas trade, the latest official estimates, which cover the second quarter of 2010, show that exports of wood and wood products rose by 8% and were up by 1% annually. But imports jumped 20% on the quarter and were 21% higher than a year earlier. Exports of builders’ carpentry fell 8% annually, while imports expanded by 13%.
Furniture imports increased by 4% in the second quarter, and rose by 14% at the yearly rate. Furniture exports increased by 2% on the quarter and by 15% year-on-year.
After retail sales of furniture fell in value by around 5% in July and August – and by more than 7% in volume terms according to official figures – results from the CBI’s September survey point to strong yearly volume growth, although sales of DIY products were down. However, this is counter to the results of the British Retail Consortium survey, which indicate that September sales of furniture and floorcoverings were lower than a year earlier, and that retail overall sales growth continued to be poor for the sixth month.
Separately published official figures for the second quarter of 2010 show an annual increase of 0.3% in the volume of household spending on furniture and furnishings. This follows a yearly fall of 1.8% in the previous quarter and is the first annual rise in demand since the first three months of 2008. In value terms, outlays were 4.5% up on the second quarter of 2009 and follow a 3.7% annual rise in the first quarter of 2010.
