Cantillon: Summer has come for Grafton

Given the weather that we have been having, it might sound churlish to declare that one swallow does not a summer make. DIY and builders' supplier Grafton launched one yesterday in its half-year trading update, specifically saying that its Irish merchanting branches made competitive gains, particularly in plumbing, heating and maintenance and improvement products.

“In what was the first period of growth since the first half of 2007, average daily like for like revenue increased by 1 per cent,” the group said. In short, it means that builders started to buy more kit in the first six months of the year.

Grafton was careful not go any further than that, but the indications are that it is an indication of a modest recovery. Revenues were up in the same business in the January to April period, even against the background of bad weather. Given that the general pattern in the building industry is that the second half is better than the first, there are grounds for cautious optimism.

That has to be looked at in the context of recent figures, such as the Purchasing Managers’ Index, showing that the recession maintained a stubborn grip on the building industry. Grafton’s figures might be the first indication that the bottom has at last been reached.

Its retailing business, the Woodies and Atlantic Homecare DIY chains, also showed some signs of recovery in the first half. Revenues were flat overall but that included a sharp fall – 8.7 per cent according Davy yesterday – in the first four months of the year.

On that basis, Grafton arguably produced at least two swallows yesterday. It may not signal the start of a heatwave, but the economy could finally be getting some sunshine.