Market Monitor: Emerging impact

Market Monitor: Emerging impact

The latest Q1 2020 data from the BMBI has confirmed the impact of the coronavirus outbreak and the ensuing lockdown towards the end of the quarter on builders’ merchant sales.

Total builders’ merchant sales in Q1 2020 declined -6.7% compared to the same quarter last year, with all core categories affected. Year-on-Year sales were actually down in all three months, falling -2.6% in January 2020 compared with 12 months previously, and -1.3% in February 2020 compared with February 2019. Social distancing and lockdown measures introduced during March led to the largest decline of the quarter with sales down -15.1% on March 2019. 

Emile van der Ryst, Senior Client Insight Manager – Trade at data analysts GfK, said: “Projections for the remainder of 2020 are difficult to make, but we know there will be a significant drop in April sales. The next few months will be critical in determining how the industry adapts to the new ‘normal’. Online sales will continue to grow and start to play an even bigger role going forward.”

BMF CEO John Newcomb added: “Merchant sales figures revealed in this report are the first results within our sector to reflect the negative impact of the Covid-19 pandemic and Government measures to reduce transmission of the virus.

“In the current circumstances no-one will be surprised by these figures. They reflect a period when confidence dropped as coronavirus spread across the world to the UK and many building sites and builders’ merchants shut down completely when the lockdown took effect on 24 March.

“Due to the method of collection, we can be sure that the BMBI results are an accurate reflection of the period. Whereas the estimates published this month by the Office of National Statistics (ONS) came with a caveat that they are subject to more uncertainty than usual as a result of the challenges they faced in collecting data during the coronavirus pandemic.

“Nonetheless the ONS figures make interesting reading. Total construction output fell by -2.6% during Q1 2020 over Q4 2019, and by -3% in Q1 2020 vs Q1 2019. A closer look reveals a poorer performance in RMI work, down -3.5% this quarter vs Q4 2019 and by-6.0% vs Q1 2019.

“Drilling down further, Private Housing RMI work — a mainstay of builders’ merchants’ sales — fell by 14.6% compared with Q1 2019, having dropped -18.6% in March 2020 vs March 2019 and by -8.6% vs February 2020. The decline in the first quarter reported by the ONS is the largest since data was first published in Q2 2012.

“So where are we now? Sites are beginning a gradual return to work whilst maintaining enhanced safe working practices. Although this demonstrates the construction industry’s desire to assist in the recovery of the UK economy, with contractors reporting a slump in new orders and reports of projects being postponed, we remain in the land of ‘unknowns’ and it is far too early to say how long that recovery will take.”

Speaking about a picture which highlighted a number of regional disparities in terms of the impact of Covid-19, John said: “The performance of builders’ merchants’ sales in different parts of the country offers a clear reflection of the regional health of construction. From the Q1 results we can see that London and the South East were the first regions to be significantly affected by Covid-19, even prior to the lockdown. The next Quarter’s results will tell us if those regions will also be in the vanguard of the recovery.”

The full BMBI Q1 2020 report can be viewed via

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