The optimist sees the doughnut;
the pessimist the hole!
It seems as though the question of whether we are coming out of recession has just been answered.
Certainly in terms of the merchant sector, the recovery that has been mooted in the press in the last weeks is still a long way away. Wolseley sustained a £766m pre-tax loss in the last financial year; Grafton’s loss was less wince-inducing but probably just as painful for them. You don’t bounce back from results like that in a matter of months. Over at Travis Perkins, Geoff Cooper has said he believes it will be 2011 before we can truly start to breathe again.
Obviously, there are various reasons why performances have been so badly hit. In Grafton’s case, it’s being so closely tied to the Irish market which is suffering even more than ours.
Then of course, there’s Wolseley with its huge American interests; it was always going to suffer when that market went to the wall. And a great deal of Wolseley’s loss is down to the huge costs involved in exiting Stock Building Supply in the US, restructuring the business and the subsequent raft of redundancies and branch closures as well as the simple fact that builder’s aren’t building as much as they were.
A report from Experian also shed a bit more gloom with the suggestion that we are in for a ‘double-dipper’, where things improve slightly, only to plummet again.
Their report found that August’s figures slipped across the construction industry, after showing slight signs of improvement in the previous months. Blip or sustained deterioration? Only time will tell.
We can apparently be said to be out of recession after two consecutive quarters of positive growth. Thus, in the same way that we all knew we were in recession, before the unofficial figures (three consecutive quarters of negative growth) allowed us to be officially so, we probably won’t feel as though we are out of it until some time after it.
Think about the people you know in merchanting and manufacturing whose jobs have disappeared, about the number of factories mothballed or on short-time working. And think about that £766m pre-tax loss. The industry might no longer be in intensive care, but we’re going to be proper poorly for a long time to come.