Are we allowed to relax now?

FENSA has reported a fourth consecutive quarter of growth in the industry, according to it’s latest figures. January installations were up 11.3%, February up 6.6% and March up 7.6% compared to the same months last year. This represents the best first quarter since 2011. These figures are based on window and door installations being recorded from it’s membership. To put this into perspective, the first quarter of 2013 saw a drop of 5.4% compared to the first quarter of 2012. So a turnaround like this shows a significant and positive rise.


Relax, It’s All Good From Here

No more doubting it now people, the good times are back! It feels a little risky to say something like that, especially as we have spent so many years being cautious about the outlook. But not only do the FENSA figures point to a very strong 214, but the overall economy has had some very welcome news from the Bank of England today too.

They have said that the national GDP figures are almost back at the same levels they were just before the economic crisis took hold. For many, including myself, this marks a major milestone in the recovery of the UK economy, and a new starting point in which to now press ahead and make the very most of the more favourable trading conditions.

Not only has GDP recovered, but there is now more people in work than ever before, with 30.43m in a job. Not only that, 133,000 extra people become employed in the first three months of this year, meaning employment was at a five year low of 2.2m. A lot of those extra jobs have been down the fact that more people than ever before have become self employed. People are deciding that building their own business, being their own boss, is the best future for them. And I couldn’t agree more!

Why Does This Matter?

First of all, the FENSA figures, whether you like the organisation or not, carry gravitas. It is estimated that FENSA installations represent 89% of all UK window and door installations. So when they report on their figures, it is usually safe to say they are accurate.

But what about those economic and unemployment figures. Well it is quite simple really, the more people in work, the more money is earned. The more money earned means that more can be spent. But away from the physical benefits, the psychological ones are just as important. The more good news stories about our economy that get out through the media, the more confident spenders are going to be. This can then translate to actual spending increases. The opposite to this is just as accurate. During the recession, hour after hour on the news channels were filled with doom stories about the UK economy falling off a cliff. That isn’t going to encourage the public to go out spending!

Any Bumps In The Road?

My biggest concern however about the positive news about the economy is that it is being mainly driven by consumer spending, although business investment is rising now too. This is risky as consumer spending can quickly dry up if there are any sudden economic shocks which produce risks to spenders and their employment. The most obvious one I can think of right now is this apparent housing bubble forming with the prices of homes starting to rise at fairly incredible rates again, especially in London.

The prices of property in the south of the UK, especially in the capital are eye watering. I saw a story last week which said that a penthouse flat in London sold for £140m! Is any penthouse worth that much, even if it’s got a prime location in the capital? Probably not. And that’s the fear. If prices climb too high, not just in London but UK wide, and they can’t be sustained, a spectacular collapse could ensue, causing interest rate chaos, squeezes on finance and negative equity all over the place. All of this would send the UK back into the same position it was at the end of 2008.

Other than that, it’s the only major cause for concern right now. Some mention of rising interest rates early next year. But all the estimates I have seen point to a 0.25% rise early next year, which shouldn’t trouble many.

So it’s all looking pretty positive right now. It might still be patchy in places, with some places seeing a slower recovery than others. But make no mistake, the recovery is entering it’s final phase. Soon we’ll be able to say the recovery is now over. Wonder what the media will call the next phase of economic growth?