Whilst the UK continues to prepare for the EU referendum on June 23rd, in the background our economy appears to be creeping closer and closer to negativity and possible recession. Yes, that “R” word again. It never seems to be that far away. But for industry in this country, the latest figures released show that it has now returned to recession.
So, what does this mean for us in the glazing sector and the wider economy as a whole?
First of all, lets look at the figures in question:
2015 Q4: industrial production falls 0.4%
2016 Q1: industrial production falls a further 0.4%
2016 Q1: manufacturing production falls 1.9% in comparison to 2015 Q1 – biggest drop since 2013
Whilst other areas of the economy are doing relatively OK, such as the services and finance sectors, it is construction and manufacturing that have been a constant drag on the UK economy. Each time numbers like this are reported, there is then a bit of pushing back from a variety of finance and accountancy firms who say they they expect the next quarter to pick up. But time after time, these predictions fail to deliver, and both the construction and manufacturing sectors are suffering from a prolonged period of stagnation and now recession.
In the media, these numbers would perhaps be higher up the bill. However, with the corruption summit starting in London, David Cameron’s and the Queen’s gaffes caught on camera and the EU referendum all making headlines, news on the economy continues to go unnoticed.
Importantly though, what does this mean for our industry?
A mixed bag
I would say that the effects for us are a bit of a mixed bag. On the one hand, whilst construction and manufacturing sectors struggle, it would seem to hint that demand for products to be made, be it windows and doors, tech, or anything else, is sliding. Not good news for us. And not good news for those people and communities where manufacturing and construction plays an important role.
However, many other areas of the UK economy are doing fairly well, especially in the services and finance sectors which make up the majority of GDP. If these facets are doing well, it means in theory that those employed in those sectors are safe in their jobs. Good news for them and good news for the economy as those people go spending, preferably on new windows and doors for their homes!
Time to panic
No, not yet. Whilst the health of manufacturing and construction is weak, most other sectors appear to be grinding on. But it’s an area we should continue to keep an eye on as it tends to be a bit of a bell-weather for the health of the economy overall.
The other thing to bear in mind is that GDP growth for Q1 of this year was just 0.4%, certainly not what was predicted. And the whispers about Q2 performance aren’t that positive either.
This is where I have an issue with ONS and Government predictions. They’re rarely right, and more often than not predictions are revised down rather than up. For example, GDP growth for 2016 overall is expected to be 2%. I must not be the only one who thinks that this is already looking like a tall order.
From a fenestration perspective, we want the UK economy to avoid any shocks right now. The UK economy is looking a tad shaky. Something serious may well throw it off course and down hill. The biggest stick in the mud is the coming EU referendum. Should we vote to leave, we can all expect a large jolt to the economy that might take a while to get over.
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