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Report
from the UK
BoE retains interest rates
The Bank of England has left interest rates unchanged at 4.75%. The move was widely expected after last month¡¯s
surprise rate rise, but many analysts still expect a further rise in rates before the end of the year. The rise will
depend on consumer spending and the strength of the housing market.
In the political arena, the announcement of the Prime Minister¡¯s departure within 12 months has brought about
some uncertainty in the markets. Since there have been no clear assurances that the current Chancellor of the
Exchequer, Gordon Brown, would take over, an election would have to be held within the Labour Party to select the
new leader and possibly the new Prime Minister. Market players were watching these developments closely to be
ahead of the game.
Firms rely on exports amid flat domestic demand
Manufacturing firms across the UK were continuing to enjoy their biggest rise in exports since 1995, but domestic
orders remained flat. A study by the Engineering Employers Federation (EEF) said 14% of firms reported a
rise in export orders in the past quarter, the fourth consecutive quarterly growth,
sending confidence high.
B&Q owner Kingfisher had highlighted the impact of a difficult semester in the domestic market. For the DIY
sector, it posted sharply lower half-year profits. Laminate and wooden floor retailer ¡°Floors 2 Go¡±, in turn, had seen
profits slipped after tough trading conditions in the first half of the year. However, the group saw sales picked up
during July and August despite challenging conditions, with high trading volume periods predicted.
Housing market consolidates with moderate growth
House prices rose 1% in August bouncing back from a sharp drop in July, according to the Halifax, the UK¡¯s
largest mortgage lender. The company said that while the UK housing market had sound
fundamentals, growth continues to moderate. In the three months through August, prices rose 0.2% compared with 2.9% in the
preceding three-month period. Meanwhile, house builder Bovis Homes said the housing market was steady during
the first quarter of the year and in July and August. It said that their completions increased 16% to 1,262 units.
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Report
from Netherlands
Dutch demand stabilized by long summer holiday
The Dutch demand for tropical hardwood in the Netherlands seemed to have stabilized due largely to the
impact of the long summer holiday-period. This was despite the good performance of the economy in the
country and in the entire EU. The Dutch Minister of Social Affairs and Labour, Mr. Aart Jan de Geus, was confident
that the long period of economic recession was now behind. The EU Finance Ministers had recently agreed in
Helsinki that extra revenues should be used to bring deficits further down and to fund important projects, such
as social house building projects.
Thus, the current slow demand was not caused by poor economic conditions but by a wait-and-see policy. Order
portfolios of joineries and building companies were filled so the outlook for the
coming months remained optimistic, signalling that active demand would
resume soon. The fact was that CNF Rotterdam price levels for DRM remained
very firm. However, although prices rose in early September, these seemed to be stabilizing. The steep price
increases seen in past months appeared to be over.
Exporters cautious of approaching monsoon
Meanwhile in Malaysia, exporters basically had not much supply to offer due to the acute shortage of materials.
Analysts pointed out that Peninsular Malaysia exporters¡¯ reaction to inquiries was slow as offers were carefully
measured. If a client requested 6 containers of 3x5¡± material, the exporter might offer 1-2 containers.
Exporters were rather concerned over whether the situation in Peninsular Malaysia would improve soon or
would get worse with the monsoon starting in a couple of weeks.
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