Amidst reports of renewed gloom among retailers, despite official estimates that suggest growing sales in October, surveys of purchasing managers reveal a mixed picture of the UK economy: weakness in manufacturing, but renewed strength in non-housing construction, and something in between in services where growth has slowed.
Official estimates indicate that consumer spending on furniture was flat between the first and second quarters of 2011 in volume terms. At current prices, demand fell nearly 6% between the first half of this year and the second half of 2010.
Furniture sales fell below their year-earlier level in October by the largest amount since September last year, according to the British Retail Consortium. Demand for fitted kitchens and bathrooms was particularly weak, but bright spots were discount-driven sales of beds, bedroom and dining furniture.
Furniture exports
Official figures show that the value of furniture manufacturers’ export turnover and orders increased by 14% in the three months to August, compared with the same period in 2010. Overseas business accounted for 6% of total turnover and orders, which were up 2% on a year earlier.
Figures for other wood and wood product firms reveal a 262% jump in export activity, which represents 9% of the total. The domestic market slipped 2%, but total turnover and orders were 4% higher than a year earlier.
Volatility has continued in construction, with total overall volumes down 0.2% in the third quarter, after 3% growth in the second quarter of 2011.
New home building dropped 4% between the two latest quarters and by 2% between the third quarters of 2010 and 2011. New private sector housing output was 3% lower in the third quarter of 2011 than in the previous quarter, but 1% higher compared with the same period last year. Home repair and maintenance work fell 1% in the third quarter, to a level 6% lower than a year before.
Output of non-housing new work rose by 2% in the latest quarter but was lower by a similar percentage at the yearly rate. Non-housing repair and maintenance output expanded by 2% in the latest quarter, and was up 8% on a year earlier.
Boosted by activity in the commercial and civil engineering markets, overall construction picked up to a five-month high in October, after near-stagnation levels in September. But the latest Markit/CIPS survey of construction purchasing managers revealed housebuilding contracting further.
Gains in new work led to the purchase of additional inputs of materials at a “solid and accelerated pace”. Nonetheless, uncertainties about both private and public sector demand in the future pushed sentiment down almost to a three-year low.
An increase in activity in the housing market during October, reported by the RICS, was accompanied by conflicting signals on home prices, and the first drop in the number of mortgage approvals for five months.
