The latest BMF Builders Merchants Building Index (BMBI) report confirms the extent of the slowdown throughout the whole of 2023.
In the fourth quarter of the year, daily sales volumes were down 10.1% on the previous quarter and by 12% compared to Q4 2022.
Total takings were down by 15.7% for British builders merchants in the fourth quarter compared to the third quarter of 2023, but with four fewer trading days in Q4, daily takings were 10.1% down. Prices were up by 5.1%, quarter on quarter.
Comparing Q4 2023 with Q4 2022, takings were down 7.3% on a like-for-like basis. Prices were up 7.1% year-on-year.
The year-on-year comparisons also show that timber & joinery products (down 10.3%) contributed most to the Q4 on Q4 decline in sales value. But all three of the largest categories sold less with heavy building materials down 7.3% by value and landscaping down 6.7%.
Across the full year 2023, annual sales values (takings) fell by 5.1%, but it would have been worse without annual price growth of 10.0% as actual sales volumes shrank by 13.7% year-on-year.
With two more trading days in 2023, like-for-like sales (daily takings) were down 5.9% in 2023.
On a category level, heavy building materials saw a full-year value decline of 3.2%, a volume decline of 17.7% and price growth of 17.6%.
The monthly BMBI reports are put together by MRA Research for the Builders Merchants Federation using point of sale data gathered by GfK.
Emile van der Ryst, senior client insight manager at GfK, said: Economically, 2023 will go down as one of the worst in recent memory for the UK, with ONS figures indicating a technical recession at the end of 2023. This backdrop had a noticeable impact on the merchanting sector. While a challenging year was widely expected within the sector, the extent of it wasn’t. 2024 should see a continuation of the challenges seen towards the end of 2023. However, price growth as measured in the BMBI should noticeably drop off in the coming months, while volumes should recover in the second half of the year, hopefully paving the way for a market returning to growth in 2025.
Builders Merchants Federation chief executive John Newcomb said: It has been yet another challenging quarter for construction, concluding a year that most of us would like to forget. Construction output seems likely to contract further before returning to growth in 2025.
Mike Rigby, the MR of MRA Research, said: Quarter 4 did little to turn the tide on falling sales volumes through the UK’s builders’ merchants, as 2023 closed -13.7% down on volume sales compared to 2022.
But despite this drop in activity and the announcement of the UK economy entering a technical recession at the end of 2023, and a continuing stream of gloomy world news, consumer confidence is increasing. Falling inflation and food prices, and maybe even the prospect of political change with a general election in view have lifted spirits. According to GfK’s Consumer Confidence Index, consumer confidence climbed three points to -19 in January 2024, the best it’s been in two years. Better still, consumers’ personal financial index also improved to zero after 24 months of negative scores. Inflation and the prospect of falling bank rates undoubtedly contributed to this. Whether it foreshadows a more positive period for the repair, maintain, and improve markets, and an increase in spend on home improvement projects in 2024 remains to be seen.
