Room for Optimism in 2015? You bet!
Economic Indicators Remain Positive
The current economic indicators seem to be generally positive, which is good news for expanding companies like JB Kind. The various measurements may not be specific to our market, but positive news does feed in to a feeling of confidence and will encourage individuals and businesses to invest and spend.
January saw inflation fall to a new low of 0.3% which was driven by falling oil prices and the well documented supermarket price war between the established brands and the discounters. There is an expectation that the economy will slip into deflation later in the year which has been termed “good deflation” as it is linked to the dramatic fall in the price of oil helping to reduce household bills by and estimated £600 per year. I am of the firm belief that deflation, for a temporary period, will not result in people delaying spending, but more likely encourage consumer purchases. The deflationary pressures are not expected to last long and when food and fuel are stripped out of the statistics the underlying trend shows inflation at a relatively healthy rate of 1.4% for a growing economy.
Supporting the positive theme, unemployment continues to fall and now stands at 5.7% of the total working population. Another way of looking at these figures (and there is always another way where statistics are concerned) is that the percentage of people in work was 73.2% of the working population. This represents a record high since these statistics were first compiled in 1971. Together, these figures demonstrate a very encouraging outlook for Great Britain plc.
The Economy and the Housing Market
As a leading door supplier to the housebuilding sector, the outlook on growth for the economy and its impact to the construction industry is of great interest to us. Taylor Wimpey said in January that it believed that it was benefitting from a “sustainable housing market” as there was lower price growth (estimated by some forecasters at 4% overall), making the market more balanced between buyers and sellers. The house builder Bovis Homes has recently announced a rise in annual profits of 69%, which has been built on the back of a record number of new homes sold.
There is clearly cause for optimism as we look forward to the rest of 2015 and into 2016. No surprise then that we were pleased here at JB Kind to announce the MBO of the company earlier this month! I call it a “Victor Kiam” moment.
By James Cadman