Business surveys and official figures released in March confirm that the economy recovered at the start of 2011 from the weather-related slowdown at the end of last year.
Nevertheless, growth in timber’s key end markets of construction and furniture will be challenging over the coming months in the face of government cutbacks, mounting pressure on household budgets, and weak consumer confidence.
The recovery was driven by manufacturing output which rebounded strongly in January. A survey by Markit Economics and the Chartered Institute of Purchasing and Supply suggests that activity also rose in February – at the fastest rate since the poll began in 1991.
The survey that looked so good for manufacturing was equally upbeat for construction. There the measure of overall activity rose to 56.3 in February, from 53.7 the previous month and 49.1 in December (where a reading above 50.0 indicates growth).
This is the strongest expansion since June 2010, and all sectors contributed, with a marked increase in residential construction which ended a six-month period where activity was the weakest of the areas monitored.
Commenting on the survey David Noble, chief executive officer of CIPS, warned that, “The situation is still fragile, however, considering the likely impact of government cuts”. This concern is echoed by the Construction Products Association, which notes that estimates of new construction orders by the Office for National Statistics for the fourth quarter of 2010 reveal that the industry remains dependent on public-sector spending on social housing, education, health and infrastructure.
New order volumes rise
The figures show that the total volume of new orders rose by 18% in the latest quarter compared with the third, leaving new orders in 2010 overall just 1% higher than in 2009. Private sector housing and commercial building orders each rose by less than 1%, although orders for industrial buildings were up 14% in the fourth quarter.
A poll by the Royal Institution of Chartered Surveyors finds some stabilisation of the housing market. In February new buyer enquiries halted a six-month slide, although the number of sales was broadly unchanged and price expectations continued to fall.
Housebuilders are also reporting a strong rise in the number of site visits and deposits paid by prospective buyers although the improvement has a strong bias to London and the south-east.
Furniture sales
Sales of furniture, which bounced back strongly in January, with yearly growth of nearly 16%, came under pressure in February. The British Retail Consortium says high street sales dropped overall to well below the level a year earlier, adding that fitted kitchens, bathroom and bedroom furniture were hit by renewed consumer caution.
Meanwhile, forecasters at Oxford Economics expect construction output to grow by an average 3% annually between 2010-2014, led by residential work.
Output of wood and wood products is forecast to grow by a yearly average of around 2.5%. But that was before the still-uncertain impact of events in Japan and northern Africa could even be guessed at.
