Are we turning a corner?

Neil Cooper-Smith, Senior Analyst, Business Pilot writes: “The headline figure this month is that at 47.4, sales are up 5.8% in August 2023 from July, which is 20.3% higher than the same period last year. If you needed a boost of confidence as we head into autumn, then this is probably it.

This upward trend is reflected in the number of average number of leads, which jumped 10.5% to 99.3 in August from July. This is also 9.2% higher than a year ago. And conversion rates are holding steady at 43.2%.

As a snapshot of the health of our industry, without any context, these figures are encouraging, and should dispel some of the doubts some business owners may have been having since the start of the financial year.

And with context, the Business Pilot Barometer helps you make sense of some of the economic drivers in Q3 2023. For example, as I digest these figures I can see that house prices have fallen by 5.3% from their peak in August 2022, knocking £14,600 off the average price.

But as we’ve seen with leads and sales going up, this is less about confidence (which can undermine overall economic performance) and more about homeowners judging where best to spend their money. Right now, it appears that renovations are more popular than moving home, because investing in a new property might not make sense if that property value continues to fall – especially as the Bank of England interest rate remains high at 5.25%.

At the moment, there is nothing to suggest that homeowners are holding back their spending. In fact, after a period of high inflation, high energy costs, and stagnant wages, then the peak period for personal austerity has probably passed. 

Instead, inflation is down to 6.8%, the typical energy price cap is down to £1,923 from £2,074, and private sector wages rose 8.2% in the three months to June according to the ONS (Office for National Statistics). 

These figures suggest that after 18 months of a squeeze on household finances, homeowners are looking to start those bigger projects.

And the ace up the Business Pilot Barometer’s sleeve is that there is an uptick in the average order value in August to £4,249.88 – up 3.1% on July. This might not seem like a massive jump, but it reverses three months of decline and it reflects the prediction I made last month.

As always it is important not to see these figures in isolation and to understand the main drivers, and using tools like Business Pilot to monitor projects from enquiry through to completion will help you improve efficiencies and maximise profitability.”