The Construction Sector is Growing

If you’re in the construction business, now might be the time to sell and make a profit as this industry is booming in 2014. Why is it booming and what does it mean for buyers that would make them want to purchase your business?

The Office of National Statistics (ONS) released data this month that suggests that in the last month of 2013 the UK construction industry finally returned to growth. This growth was attributed to the increasing recovery of house building that is a result of the housing market recovery.

The ONS recorded that construction output rose by a rate of 2% in December from the month before. It fell by 4% in November. This indicates that an industry that was hit by the burst of the housing bubble pretty hard back in 2008 is experiencing growth, even if it is unsteady. Furthermore construction output in total rose 1.3% throughout 2013.

Specifically private sector house building saw a surge of 5.1% as 2013 closed. This indicated that this particular sector saw a massive jump of 21.6% from the same time a year earlier. Other areas of the sector saw growth, even if on a smaller scale.

These figures indicate that that the construction industry has finally gathered the momentum it needs to recover from the ravages of the housing bubble burst. This is because according to the ONS they indicate three consecutive quarters of growth. A phenomenon like this hasn’t been recorded in the construction industry since 2010, the height of the recession.

House building has been cited as a major reason for this revival. House building itself has been aided by government schemes such as Help to Buy, which were introduced to help first time buyers onto the property ladder. Also the holding of interest rates at 0.5% by the Bank of England is thought to have contributed to sector growth.

Howard Archer, chief UK and European economist at IHS Global Insight has commented on what these figures mean. He said that "improving house building is particularly welcome news, given that a shortage of properties is a major factor, repeatedly putting upward pressure on UK house prices." This indicates that in order to hook in new buyers, construction is only going to increase further in 2014.

At RTA Business we see this as evidence that if you are in the construction industry it really could be the right time to sell. These figures are better than they’ve been for many successive quarters and there’s also a large capability for expansion. These are two things that lure buyers into purchasing your business. 

Eurozone Economic Momentum Gathers Pace

Reports have surfaced this month that suggest that the momentum of economic growth in the Eurozone is gathering pace. What does this mean for the UK economy and business acquisition as 2014 unfolds.

Eurostat, The EU’s office dedicated to statistics released figures last week that suggest that in particular Eurozone GDP growth is speeding up, aiding in economic recovery. These figures specifically show that the Eurozone economy experienced a growth rate of 0.3% in the final quarter of 2013.

This growth rate saw a jump from the 0.1% recorded in the previous quarter, and together they signify the longest period of economic growth since the onset of the recession, which lasted 18 months. The recession was in fact the longest period of economic contraction in the EU single currency era.

What added to this news that December alone stood at a higher rate of growth than the entire quarter. The Eurozone measured together, including the UK which has recorded stronger rates of GDP growth than most EU states, a growth rate of 0.4% in GDP for December.

However there’s a mixed message as Eurostat recorded a contraction of 0.4% for the Eurozone for the entire year. However Europe as a whole, including non-Eurozone countries recorded a total GDP growth rate of 0.1% for 2013.

Chris Williamson, chief economist of Markit was reported by the BBC to have given his thoughts on what these figures mean. He said that they indicate that “the Eurozone's recovery has moved up a gear." The Eurozone has been thought to be in recovery for the last year.

He then elaborated on what this means, saying that "not only has the pace of growth picked up to the fastest since the second quarter of 2011, but the recovery is also becoming more broad-based, encompassing core and so-called 'periphery' countries alike."

What this means is that not only is the economic recovery getting stronger, everybody is recovering. It’s not just affecting traditionally strong economies such as the UK, France and Germany. Those such as Ireland, Italy and Greece that suffered severely from the recession are recovering as well.

This all underscores the fact that the British economy is finally in sustained recovery. Not only is GDP stronger, indicating a greater flow of money that can strengthen the nation’s economic power, but the UK’s trading partners are recovering as well, providing a greater scope for business opportunity.

At RTA Business we understand the importance that the strength of the UK and EU economies has for buying businesses. The stronger the economy, the more likelihood there is of expansion, meaning the more likely you are to be able to sell your business to someone looking to expand for a profit.

2013 Sees Shop Vacancy Rate Fall

Shop vacancy rates saw a slight fall throughout the country in 2013; however these numbers vary drastically from region to region. What do the latest figures on shop vacancy rates indicate about the rising number of small retail businesses?

This month the Local Data Company (LDC) released its latest figures concerning retail store vacancy rates and these figures showed a slight fall in overall vacancy rates across the UK. However this fall has been somewhat concentrated in certain regions.

According to the LDC shop vacancy rates slipped to below 14% for the first time since July 2010, the height of the Great Recession. The rate in for December of last year stood at 13.9%, up from a high of 14.6% measured in February 2012.

Economic experts are citing an improving economy, along with collective government efforts to aid shopping activity in town centres for these positive numbers. These conditions have actually seen the national average for shop vacancy fall to 12.2%.

Despite the average some areas are still suffering heavily from shop closures. The North West recorded the worst figures, standing at 17.3%. Areas in the North West including Morecambe, Bolton and Bootle were measured as the worst in the nation.

In contrast London recorded the lowest rate of shop vacancies with the capital’s figure standing at 8.1%. Other areas in the South also saw falling shop vacancy rates.

The Guardian reported that Matthew Hopkinson, director of LDC labelled 2013 a “pivotal year” for the nations shopping districts as vacancy rates finally held steady. He also noted that it is "clear from LDC's latest report is that there is a significant and growing divide between the north of the country and the south.”

Government backed schemes centred in small town have aided in the fall of overall UK vacancy rates. Schemes such as Future High Streets Forum and revival efforts under the Portas Pilot scheme have channelled funds and resources into town centres to aid the growth of small businesses and this is what has caused the vacancy rate, alongside economic growth, to fall.

A fall in shop vacancy rates suggests by its nature a rise in the number of successful small business we are seeing on Britain’s high streets. This is no surprise, as in order for a shop to stop being vacant, it needs business to fill it; the government backed schemes were designed to foster small business activity.

At RTA Business we believe that these numbers suggest that small business growth is leading to a stronger business acquisition market. After all more small businesses and economic growth lead to larger businesses looking to expand. It’ll be interesting to see how vacancy rates continue as the year unfolds. 

What Does the State of the Union Mean for The Economy? - RTA Business

Tuesday 28^th January saw US President Barack Obama give his annual State of the Union address to the American people. Considering America’s role as the lynchpin of global trade, what does the State of the Union mean for the global economy?

The State of the Union speech was a tradition started by American founding father George Washington. Although it has been dropped and revived, the State of the union speech is now an American tradition. It acts to lay out the President’s agenda for the year. It acts in a similar way to the Queen’s speech at the opening of Parliament.

So what does Obama’s speech tell us about the global economy? Critics and pundits are already commenting on how Obama’s speech was one that was politically charged. It certainly was; Obama made it quite clear that he is going to bypass a Republican House of Representatives wherever he can to get his agenda passed.

This was the key overarching theme that we should be interested in. Obama has had enough of being blocked at every turn. His anger has been ignited particularly by the House’s reluctance to raise the national minimum wage.

This was the central issue as far as global economy was concerned and it played out in several ways. It is a key issue because a higher minimum wage would increase American spending power. America as the world’s largest economy is crucial to helping the global economy expand by injecting money into it. More spending by America leads to more room for business growth; strengthening economic activity around the world.

This played out directly and indirectly. Directly Obama raised the minimum wage for federally contracted workers to $10.10 an hour; a significant increase that will broaden the spending power of numerous low level government workers. It gives the American economy a cash injection.

The indirect approach was used by Obama to urge Congress to raise the national minimum wage and to urge state legislatures to do the same. He’s unlikely to get anywhere with this message with the Republican controlled House, however he could with the states. 20 of them have already done so off their own backs and with a crucial election year coming up, more may do so.

At RTA business we reckon this has a direct effect on business acquisition. A stronger global economy means more room for growth, which traditionally leads to both an expanding pool of potential buyers and rising values for business’ on sale.