Words: Mike Rigby, from MRA Research

Just over a year ago, indicators of recovery and growth were flashing green. Consumer confidence was building. Animal spirits were breaking out. People were shrugging off the usual media diet of depressing news and starting cautiously to spend. Businesses were preparing to invest. The UK was aching for change and a return to growth, and a new Labour government swept to power promising both. 

Expectations were high, too high for a cabinet surprisingly unprepared, and inexperienced in business and the business of government. After a short honeymoon, the new Government began to talk the economy down until confidence fell across the board and kept on falling, losing all its gains of the previous twelve months. 

What can we glean from the statistics? 

The latest figures from BMBI, the Builders Merchant Building Index, show Kitchens & Bathrooms July’s value sales up +1.8% year-on-year, outperforming Total Builders Merchants, which was up by just +0.1%. Kitchens & Bathrooms was one of the strongest categories along with Renewables & water Saving (+3.7%) and Timber & Joinery Products at +2.6%. 

In July, the monthly Kitchen & Bathroom sales value indexed at 123.5, compared to 2019. July was one of the strongest Kitchen & Bathroom sales months of the year. 

For those who don’t know BMBI, the Builders Merchant Building Index, is “the best proxy there is for RMI” according to John Newcomb, Chief Executive of the Builders Merchants Federation. That’s why the Department for Business & Trade includes BMBI in its Monthly Construction Update report. Compared with other measures of RMI markets, including the ONS, which sample a relatively small number of sources and gross up to estimate total market trends, BMBI is based on sales out to builders, trades, and the public from over 88% of national, regional, and larger independent builders’ merchants. Now in its 10th year, it reports monthly sales by value, volume and price and tracks the bulk of the market by category. 

What should we take from this? 

The economy is not in great shape. But it’s not that bad. It’s in better shape than some other leading countries. The public doesn’t think the economy is great either, or that the government is managing it well. GfK’s barometer of consumer confidence records a two-point drop in September in consumers’ expectations for the General Economic Situation in the next 12 months to -32, deep in negative territory. But their view of their own Personal Financial Situation over the next 12 months dropped just -1 point to a resilient +4! Personal financial expectations have been improving since the end of Liz Truss’s premiership and are above the ten-year average. 

This is filtering down to companies with signs of increased demand for discretionary big-ticket items such as cars, kitchens, and sofas. New car registrations were up almost +14% year-on-year in September.

In its half-year results to 31st July, Kingfisher plc attributed some of B&Q’s overall like-for-like +4.6% growth to big ticket sales growth, and singled out its introduction of a three-tiered kitchen offering – Essential, Select and Signature – with “broadened customer appeal, which contributed meaningly to performance”.

To adapt a line from an old Bob Dylan song, “It’s not light yet, but it’s getting there.”