Green shoots appear, so is the worst over?
Economic indicators - from house prices and the FTSE100 to factory output - are moving in the right direction. The AJ looks at the data in six key areas to investigate whether we have seen the worst of the recession
The Royal Institution of Chartered Surveyors (Rics) said house prices may end 2009 higher than they started. Earlier this year it predicted a 10 per cent fall during 2009.
The Halifax reported that house prices rose by 1.1 per cent last month, the second increase in the last three months.
Taylor Wimpey, Britain’s largest housebuilder has started buying land again, after suspending purchases in 2007, and sees ‘encouraging signs of stability’ despite making a loss of £682m for the first half of 2009.
‘There has been a clear change in the housing market over the past few months and, as a result, it is unlikely that we will now see the kind of house price falls widely predicted at the start of the year. The return of buyer demand and the limited availability of housing on the market could be enough to support prices so it wouldn’t be surprising to actually see prices increase further from here in the short term.’
Brigid O’Leary, Rics senior economist
The services sector - which accounts for 75 per cent of the economy - saw a sharp rise in activity last month, according to a Chartered Institute of Purchasing and Supply (CIPS) survey. Their ‘services sector indicator’ grew for the third consecutive month in July - and saw the strongest rise in 17 months.
‘The services sector is rebounding at an unprecedented rate after what has arguably been the most savage economic downturn since the end of World War II. After hitting an all time low in November, July saw the sector make marked gains with new business activity rising for the third month running and at the sharpest rate in almost a year- and-a-half… We’re still seeing companies reduce their prices and the job landscape remains difficult with wage pressures blunted as overall staff levels continue to fall steeply.’
David Noble, CIPS chief executive officer
In June factory output surged to its best performance in 17 months thanks to a surprisingly strong showing from the car industry.
Office for National Statistics figures showed that industrial output, which had collapsed late last year, rose by a stronger-than-expected 0.5 per cent per month in June.
The Office for National Statistics (ONS) says shoppers came back to the High Street in strength during June, with sales up 1.2 per cent from the previous month, and 2.9 per cent year-on-year. This is four times what analysts predicted, after sales had declined 0.9% in May.
A number of British firms, including Next, Morrisons, Halfords and B&Q owner Kingfisher have reported better-than-expected figures in recent weeks.
‘Nobody should take too much comfort from the figures - household retrenchment has a way to run yet, especially with unemployment rising’
Colin Ellis, Daiwa Securities
The FTSE100 share index has risen more than 30 per cent since March as investors regain confidence.
‘Overall, these surveys provide encouraging evidence that the economic recovery is building up a decent amount of momentum. But the recovery is still in its early stages.’
Vicky Redwood, Capital Economics
The UK’s banks are still writing off vast sums due to bad loans (often to property developers) and sub-prime mortgage investments. But such ‘impairments’ have peaked for some banks and those that can afford to lend money - such as Barclays and HSBC - are making profits.
However the latest figures from the Bank of England show that lending by banks to non-financial firms shrank by £14.7 billion in the three months to June, the biggest fall since records began in 1997. Lending to the construction industry fell by £2.1bn in the quarter.
‘Bank mergers, recapitalisation and schemes targeted at the big banks to stimulate lending as a result of the banking crisis risk stifling choices of finance for small firms, leaving business owners with nowhere to turn if they are refused credit by the major high street lenders’
Federation of Small Businesses
The number of jobless architects is continuing to rise - but at a much slower rate. According to the Office for National Statistics, just 15 new claims were made for benefits by architects in June 2009, which is a significant drop compared to the 370 architects who joined the dole queue in May.
- Has your practice seen any green shoots of recovery - or are you in for another year of misery? Have your say in the AJ state of the industry survey.