The Builders Merchants Federation has announced the twelfth release of the Builders Merchants Industry Forecast report, Winter 2023 Edition.
The 36-page document provides a comprehensive analysis of merchant market performance of 2022 coupled with an assessment of the key factors affecting builders’ merchants to project future sales for 2023 and 2024. Expanding upon the data from the Builders Merchant Building Index (BMBI), the report also incorporates findings from the quarterly BMF State of Trade Survey which measures confidence within the market in addition to statistical information from government and other construction sector organisations along with industry insight from merchants and suppliers.
Writing in the Executive Summary, BMF CEO John Newcomb said: “Since the publication of our last forecast, the UK has been rocked by political and economic upheaval. The fallout from the short-lived Trussonomics experiment has seen interest rates soar, and consumer confidence plummet. From Q3 onwards, some areas of construction have slowed.
“While sales values through UK builders’ merchants increased in 2022 this was largely driven by price inflation rather than volume growth, which fell significantly. As we await December 2022 sales figures, we anticipate overall year on year market growth will sit at +6.7%, with the caveat that this is mainly down to higher prices, not volume growth.
“The 36-page document provides a comprehensive analysis of merchant market performance of 2022 coupled with an assessment of the key factors affecting builders’ merchants to project future sales for 2023 and 2024.”
“Comparing 2022 with 2019 (pre-Covid), sales volumes were relatively flat, and there are signs of worsening during 2023, as the Chancellor’s measures to counteract recession may further reduce consumer spending power. Price inflation is expected to persist through the first half of the year, before gradually slowing, while sales volumes in 2023 are likely to fall below 2019 levels.
“With so much volatility surrounding the general economic picture there is considerable uncertainty forecasting demand for domestic RMI work and increasingly for new housing, where higher mortgage rates and the end of the Help to Buy scheme at the end of March are expected to slow new sales. Other areas of construction, however, continue to see strong demand, particularly for industrial, commercial, infrastructure and government projects.
“Taking all these factors into account, our baseline forecast predicts negative growth of -1.6% in 2023 over 2022.
“However, with growth starting to pick up in the latter half of 2023 as inflation begins to settle and recession pressures ease, the market is expected to bounce back in 2024, with average growth forecast at +2.1%.”
The comprehensive sector overview is free for all BMF members and is available for a fee for non-members. Visit www.bmf.org.uk for details.
