North­ern house­builders shrug­ging off the un­cer­tainty

Yorkshire Post - Business - - BUSINESS -

WE ARE see­ing mixed sig­nals about the UK econ­omy with wor­ry­ingly slug­gish growth in the dom­i­nant ser­vices sec­tor, which sank to its low­est level in nearly a year last month.

The closely watched Markit/ CIPS ser­vices pur­chas­ing man­agers’ in­dex report said slow growth in new busi­ness sent ac­tiv­ity in ser­vices to its low­est level since September 2016.

The slow­down in ser­vices, which ac­counts for around 80 per cent of the UK econ­omy, will send warn­ing sig­nals about the health of the UK.

The worst hit ar­eas have been ho­tels, res­tau­rants, cin­e­mas, gyms and hair­dressers as con­sumers cut back on nonessen­tial spend­ing amid higher in­fla­tion and weaker wage growth.

On a brighter note, busi­ness con­fi­dence reached a three­month high, but the level is lower than be­fore Bri­tain voted to di­vorce from the Euro­pean Union last year. The Of­fice for Na­tional Statis­tics con­firmed last month that Bri­tain de­liv­ered the slow­est growth out of the G7 group of na­tions in the sec­ond quar­ter, ex­pand­ing by just 0.3 per cent be­tween April to June.

It came as house­hold spend­ing slumped to its low­est level in nearly three years.

How­ever, while ser­vices are in the dol­drums, man­u­fac­tur­ing is boom­ing thanks to the fall in the pound.

UK fac­to­ries pushed to a four­month high in August ac­cord­ing to of­fi­cial data.

The num­ber of fac­to­ries which saw out­put in­crease touched an all-time high of 34 per cent in the third quar­ter, ac­cord­ing to data from BDO and man­u­fac­tur­ing body EEF.

Or­der books also touched record heights on stronger over­seas de­mand and 47 per cent of com­pa­nies saw ex­ports to the Euro­pean Union grow.

Lee Ho­p­ley, EEF’s chief econ­o­mist, said man­u­fac­tur­ing firms are “mak­ing hay while the sun shines”, but she ex­pects growth to sta­bilise in the com­ing months.

She added there is lit­tle doubt that Brexit is likely to weigh on sen­ti­ment over the next 12 months with un­cer­tainty over the UK’s terms of exit.

Mean­while, the con­struc­tion sec­tor un­ex­pect­edly slowed to a one-year low in August as new busi­ness slumped for the sec­ond month in a row.

The PMI report pointed to a lack of new or­ders as the trig­ger for the slow­down, with a healthy per­for­mance from house­build­ing be­ing coun­tered by the sharpest drop in com­mer­cial devel­op­ment since July 2016.

There is one area that re­mains re­sound­ingly ro­bust – North­ern house­build­ing – as we have seen by the ro­bust growth of house­builders with a sharp fo­cus on York­shire and the North.

Ear­lier this week North­ern house­builder Avant Homes an­nounced plans to ex­pand be­yond its South York­shire base and into other parts of the county as it meets ris­ing de­mand for houses worth un­der £200,000.

At the mo­ment the group is fo­cused on its South York­shire and East Midlands heart­lands, sell­ing houses for an av­er­age of £255,000 and it sees a lu­cra­tive mar­ket be­yond this niche.

It plans to take on the big house­builders like Per­sim­mon and Tay­lor Wim­pey, which are do­ing very well in that part of the mar­ket.

De­spite dire warn­ings about the hous­ing mar­ket Per­sim­mon, York­shire’s big­gest listed com­pany, re­cently an­nounced a big rise in half-year prof­its and strong de­mand from cus­tomers for its tra­di­tional style houses.

The York-based firm has seen no sign of any Brexit im­pact as high em­ploy­ment lev­els are sup­port­ing a mar­ket that is see­ing strong de­mand for new homes, mit­i­gat­ing the im­pact of ris­ing in­fla­tion.

Per­sim­mon’s rel­a­tively low house prices (the av­er­age is £213,000) and its clear fo­cus on the re­gions have boosted trad­ing.

While the out­look for many parts of the econ­omy looks bleak at the mo­ment, North­ern house­builders are keen to ex­pand and meet strong de­mand in their ar­eas.

There will be winners and losers as the econ­omy shows signs of trou­ble ahead, but the North is do­ing what it does best – get­ting on with the job.

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