Q1 challenge, Q2 bounce
January 27, 2021
Manufacturers in the furnishing sector are currently experiencing a reduction in orders of up to 60% but anticipate a bounce back in Q2 based on high household savings ratios.
Nick Garratt of the British Furniture Manufacturers organisation says: "The third lockdown has resulted in a rapid fall in consumer spending – our members are reporting order intake at levels 40-60% below the levels a year ago.
"Members are reporting a challenging short-term position but most still have a strong order book from the Q4 bounce-back last year. It is likely that consumers will come out of this lockdown with savings ratios at much higher levels. We are hopeful that the recovery will be swift," he said in the BFM's monthly Economic Review for February.
Mr Garratt also cited the comments from Bank of England chief economist Andy Haldaneon January 19 when he said that the huge economic shock delivered by the initial lockdown in March and April last year, when output fell 25%, was likely to prove more transient than the 2008-09 global financial crisis which had then generated a large overhang of bad debts.
"“If we get the recovery that I expect to start coming on stream, probably at a rate of knots from the second quarter, that will hopefully...improve the prospects of re-employment," he said.
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