The latest Building Materials Forecast Report from the Builders Merchants Federation reflects on a year of continuing uncertainty affecting the UK economy and “foresees no dramatic uplift in 2024.”
With both sales volumes and sales values for heavyside building materials falling over the course of the year, the BMF’s final forecast covering 2023 shows negative growth of -3.5% over 2022 – down from -1.4% in its previous forecast, published mid-year.
There are few signs that this state of affairs will improve in the short term, with the BMF forecasting a further decline in Q1 2024, down by -2.2% on the first quarter of 2023.
However, building material sales are forecast to improve later in the year, as interest rates begin to fall and we move towards a general election. While the forecast remains cautious, it does envisage sales of building materials tipping into positive territory, with annual growth of +0.4% anticipated for 2024, increasing to +1.0% in 2025.
With the Winter Forecast compiled to provide key market information and a clear indication of the direction of travel for the builders merchants’ industry, BMF CEO John Newcomb said: “Fourteen interest rate rises alongside the effects of a cost-of-living crisis have taken their toll both on consumer confidence and the new house building market for well over a year, (and) we have seen both volume and value sales through builders’ merchants fall during 2023.
“This mirrors much of what has been observed in the wider UK economy and its impact on the housing market, where new housebuilding registrations have plummeted to their lowest levels since the start of the pandemic and close to levels last seen in 2009. Against this background, we are unlikely to see a dramatic upturn in 2024, but we are cautiously optimistic that we will see the first signs of recovery.”
Thomas Lowe, the BMF’s Industry Analyst and Economist, added: “In addition to the slowdown in new house building, the current burden on household finances means Repair, Maintenance and Improvement work (RMI) has been competing with other priorities for consumers’ cash. This has resulted in households postponing larger scale RMI projects.
“However, the data shows evidence of lightside RMI projects remaining relatively strong with all lightside categories seeing year on year value growth in the recent quarter, providing one ray of light within a pretty gloomy picture overall.”
Thomas continued: “While market conditions are expected to remain volatile, arguably the long-term economic health of the merchanting sector is improving. As net inflation of building materials settles faster than the macroeconomic picture, this may allow for a faster recovery once consumption starts to pick up again as pressures on household disposable income start to alleviate.”
The 34 page BMF Winter Forecast Report combines a comprehensive analysis of merchant market performance from July 2014 to September 2023, taken from the Builders Merchants Building Index (BMBI), coupled with analysis of key factors affecting builders’ merchants’ sales to project future sales in Q4 2023, 2024 and 2025.
The Builders Merchants Industry Winter Forecast Report 2023 is supplied free to BMF members and priced at £250 for non-members. Contact Thomas Lowe, BMF Industry Analyst/Economist at thomas.lowe@bmf.org.uk to request a copy of the latest report or if you have any questions.
Total membership of the Builders Merchants Federation (BMF) as of 1 Jan 2024 stands at 950 merchant and supplier companies who together have combined sales of over £44.9bn and employ over 208,000 people in the building materials industry. The BMF’s 498 merchant members, including 73 now from Ireland, operate from over 5,800 branches across the UK and Ireland.
