The latest Builders Merchants Building Index (BMBI) report shows that price growth in building materials is slowing and there are signs of volume recovery.
In the second quarter of 2023 the amount of product sold (volume) across Britain was 13.5% lower than in the same quarter of 2022. The value of those sales was down 4.1% year on year.
While both numbers represent a further fall in business for builders’ merchants, and thus a slowdown in UK construction – particularly repair, maintenance & improvement (RMI) – the numbers are smaller than they were in the first quarter. Volumes were down 16.4% in the first quarter, year-on-year.
Comparing first and second quarter sales this year, total sales revenue in Q2 was 7.6% higher. For the first time in four quarters, quarter-on-quarter growth was entirely due to stronger volumes (up 11.3%), with prices falling by 3.3%.
With four fewer trading days in Q2, quarter-on-quarter growth is even more striking. Taking the trading day difference into account, sales revenue in Q2 2023 was up 14.8% on the previous quarter.
Year-on-year, nine of the 12 categories had higher value sales, led by Renewables & Water Saving (+44.4%), Decorating (+12.3%) and Plumbing, Heating & Electrical (+9.1%). The largest category, Heavy Building Materials showed only a marginal value gain at +0.5%. The second largest category, Timber & Joinery Products was the weakest performer at -16.3%, though this result is largely influenced by the declining price of timber and sheet materials, with volume decreasing by -3.7%.
Quarter-on-quarter, six categories had higher value sales, with Landscaping (+47.3%), a largely seasonal category, leading the way. This was followed by the largest category, Heavy Building Materials (+9.0%). Timber & Joinery Products (+2.1%) was among four categories that grew more slowly. Of the six categories selling less, Plumbing Heating & Electrical (-12.2%) and Workwear & Safetywear (-12.7%) were weakest.
Builders Merchants Federation chief executive John Newcomb said: “Challenges continued for the construction industry in the second quarter of the year, with house-building feeling the effect of rising mortgage rates which are now at a 15 year high. While the BMBI shows total value sales in Q2 2023 were down on the same period last year, one positive we can take from the data is that merchant trading has seen the first signs of volume recovery in the second quarter, with price growth now slowing. Hopefully, this is the first step towards market normality down the line.”