I read something the other day that took me a little by surprise, and it was the suggestion that the installations market may have already peaked. The other day FENSA had released a press release showing less than impressive installation registrations. I would love to tell you those figures exactly but I cannot find the figures online, but after so many quarters of strong growth, the latest quarter shows a definite plateauing. Lets examine this further.

June 6th Effect?

In that press release (which I currently don’t have access to) it mentioned that one of the reasons for the flattening out might have been the law changes that came into force on June 6th. It said that FENSA had to freeze a number of accounts which would have prevented some companies being able to register installations.

At first glance I didn’t pay much attention to that. Surely FENSA didn’t have to freeze so many accounts that it would actually have such a profound impact on the quarterly figures. But then I thought about it again. It wouldn’t have been mentioned if FENSA didn’t think it was important. And if it did have an effect on the figures, then that points to a worryingly large number of companies who weren’t ready for the changes to the laws.

Drop In Construction To Blame?

In the three months up to May, construction had actually dropped slightly by 0.8% compared to the last quarter. Now given that the construction sector can be seen as a very wide ranging sector, it might be stretching it a little too far to suggest that this slow down has caused a slow down in window and door installations to residential properties.

But it is something we need to keep an eye on. Construction is still nearly 5% higher than this time last year. However if we start to see a cooling then that could have a more serious impact on ancillary industries, including ours.

I don’t expect a slow down however. In fact I expect construction levels to keep rising. The reason being that the Government is under extreme pressure from all corners to increase the building of new affordable homes, to force councils sitting on land to build on it and to build more council houses. If the Government does manage to pull it’s finger out and make this happen, construction figures should remain strong.

All Part Of The Recovery

I think in reality this flattening off in the figures is all part of the wider recovery. We’re not all that far into a recovery, the recession still seems quite recent for a lot of us. And when has a recovery always been plain sailing?

GDP growth is expected to be strong this year, with growth expected to be a similar percentage next year. That means if the economy holds steady at it’s current rate, this might the level of activity we can get used to. Which to be honest, is quite busy for a lot of businesses anyway. If the economy however decides to step up a gear, then I expect we will see FENSA reporting on better quarterly figures in the future.

We need to look at this in the long term. Say the UK economy performs well for the next decade, we can assume that GDP will mostly grow. It’s still growth, but it will vary quarter to quarter, year to year. And that pattern will be mirrored in our own industry. I think this is just a blip in the long road ahead. Before long I would expect FENSA to start reporting stronger numbers once again, perhaps as early as the third quarter in 2014.

So I wouldn’t hit the panic button just yet. Our industry is still growing, it’s just taking a little breather to consolidate the successes of the last 12-18 months.