“There is a long battle ahead,” says PBM editor Paul Davies in the October edition Viewpoint column as the impact of the pandemic continues to be felt in every aspect of our lives.
“This year is probably unique, the most memorable we’ve ever had, and we still have some way to reach before 2021. The initial shock and fear have been replaced by the realisation that this is a long-term problem and a lot needs to happen before the world returns to what was previously considered normal,” so wrote Emile van der Ryst, Senior Client Insight Manager – Trade at GfK, in the introduction to the Q2 Builders Merchants Building Index report which was published towards the end of August.
It is an especially apposite statement to describe a situation that remains inescapably fluid.
The BMBI data reveals the sector was down by -38.6% by Q2, yet as Emile attests: “April, May and June couldn’t have been more different”. The near full lockdown in April saw a year-on-year decline of -76.5% whilst May ‘recovered’ to -39.9% as restrictions were relaxed. In June, this grew to 2.2% whilst anecdotal evidence and data from other sources suggests that growth continued over the summer as restrictions were relaxed further and the good weather facilitated more progress, for example in a ‘booming’ BMBI Landscaping category.
So, well into autumn, where are we now? As we discuss later in the issue, the most recent IHS Markit/CIPS data show a slight contraction for the wider construction market in August, but confidence and optimism within the merchant sector and their predominantly SME trade customers seems to be holding strong — see, for example, feedback from Travis Perkins, Jewson and Burton Roofing across pages 14-15 along with the findings presented in this month’s ‘The Pulse’ tracker survey.
Yet whilst we can analyse the data of the year so far, reference points to previous periods and the experience of years past are somewhat unreliable markers. As Emile so aptly said, these are truly unique circumstances — and despite the remarkable resilience of the sector to recover thus far, the fear is that this is only a lull before another storm.
The most immediate danger is the looming conclusion of the furlough scheme (notwithstanding a £1,000 bonus for businesses keeping on previously furloughed employees to January). As discussed in this column last month, many sectors have seen a seismic shift in working practices and once the level of state subsidy — which supported 9.6m individuals with claims submitted by 1.2m businesses — is scaled back from 1st November, only then we will begin to see a much more accurate economic picture.
The end of furlough is set against a backdrop of a substantial rise in the number of COVID-19 cases, and a clear plan to balance the ongoing health risk with the needs of the economy remains alarmingly opaque. There have been many pronouncements to support individuals, companies and wider business sectors — and not least, the construction industry — yet any broader strategy remains somewhat unclear.
‘Whack a mole’ local lockdowns and vague insinuations that workers should ‘go back to the office’ (despite the simplistic headlines, Covid-secure guidelines for workplaces and public transport limit the numbers actually able to do this…) do not a cohesive plan make.
On top of all this, the issue of Brexit is rising up the news agenda once more. With the transition period finishing at the end of the year, whether you support Brexit or not is no longer the concern; from January, the UK will be out of the EU — but we still don’t know on what terms…
In short, the industry has demonstrated remarkable ingenuity and flexibility to perform so well against the odds. But there is a long battle ahead.
“The end of furlough is set against a backdrop of a substantial rise in the number of COVID-19 cases, and a clear plan to balance the ongoing health risk with the needs of the economy remains alarmingly opaque.”
As events are changing at such a rapid pace, it should be noted this column was written on September 8. Click here to see all the latest updates on the PBM website.