Figures for Q2 2023 released in the latest BMF’s Builders Merchants Building Index (BMBI) confirm that price growth in building materials is slowing and show the first signs of volume recovery through UK builders’ merchants.
However, whilst volume growth was evident between the first two quarters of the current year, overall sales for Q2 2023 were lower than the same quarter in 2022.
Quarter 2 2023 v Quarter 2 2022
Comparing the second quarter of 2023 with the same quarter in 2022 shows total sales values were -4.1% lower this year. Price growth, a combination of inflation and product mix changes, was +10.9% higher, but volume decreased by -13.5%. Nonetheless, this is an improvement on the first quarter of the year; prices in Q1 2023 were +16.9% higher than Q1 2022 and volume sales fell by -16.4%..
Nine of the twelve categories had higher value sales year on year, 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 2 2023 v Quarter 1 2023
Comparing sales in Q2 2023 with the first quarter of the year, total sales in Q2 were +7.6% higher. For the first time in four quarters, quarter-on-quarter growth was entirely due to stronger volumes (+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, like-for-like sales in Q2 2023 were +14.8% higher than Q1 2023.
Six categories had higher value sales quarter on quarter, Landscaping (+47.3%), a largely seasonal category, leading the way, 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.
John Newcomb, CEO of the Builders Merchants Federation said: “Challenges continued for the construction industry in the second quarter of the year, with housebuilding 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.”
Emile van der Ryst, Senior Client Insight Manager – Trade at GfK, added: “The second quarter remained challenging for the whole UK economy, with inflation inching down and interest rates raised to accelerate movement towards the targeted inflation figures for the end of 2023. Against this background year-on-year building material sales in Q3 will likely remain negative but should see price growth falling further and volume continuing to show signs of recovery.”