Builders Merchants Journal – BMJ Publishing to Builders Merchants and the UK merchanting industry for more than 95 years
The Construction Products Association, which is a part of the Construction Leadership Council, has released a statement explaining that little has changed, in terms of product supply, since last month’s report with good availability across all products and regions.
This is largely driven by a continuing overall decline in construction activity and, therefore, product demand – the picture varies across different sectors and regions of the country with demand in some remaining steady or declining only slightly, while others are experiencing more challenging conditions.
The statement explained that with interest rates remaining volatile it has a knock-on effect with consumer confidence – the CLC expects this to remain like this well into 2024.
It highlights that one major housebuilder has forecasted a 25% reduction in the number of houses built in the current trading year.
It shows that sales through builders’ merchants, which had been better than expected in Q2, have now entered a downward trend and volumes are not expected to pick up until Q3/Q4 2024. This is leading to price softening across most product areas, the exceptions being products requiring high energy input to manufacture, and plumbing/HVAC and electrical.
The report continues by explain that in line with the slowing market, brick, block and roof tile manufacturers are balancing ‘just-in-time’ production levels and stock on the ground as storage is now proving challenging. They are, however, keeping a careful eye on indicators to rebuild stocks when required. Investing in flexible and agile capacity should help to counter any sudden surprise peaks in demand.
Members of the PAG panel highlighted growing problems of cash flow and liquidity. Everyone in the industry, from clients through contractors and the materials supply chain has a role in addressing this. For example, hardening payment behaviours between Tier 1,2,3 and 4 contractors are only adding to market pressures, especially on smaller firms. Builders’ merchants, who provide a financial bridge between manufacturers and contractors, are experiencing slower payments from customers and more bad debts.
The statement finished by highlighting the issue with labour and skills shortages across UK construction persists, with concerns compounded by fears that any prolonged downturn will result in further job losses and a smaller supply chain that is less capable of meeting demand when the market inevitably returns to growth.
The Construction Leadership council said it will continue to lobby the government for support around this issue and will be watching the Autumn Statement in November with expectations of some progress.
