The Builders Merchant Building Index (BMBI) report has revealed its Q4 2022 figures and despite a Russian invasion, energy crisis, rise in inflation, three prime ministers and a disastrous economic policy rejection, the sector was still able to see value growth against 2021.
An increase of 6.9% was published, driven by price growth of 16.2% and a volume decline of -8.0%. All categories saw value growth apart from timber and joinery and landscaping, which declined by 2.2% and -0.6% respectively.
The best-performing category for the year was renewables and water management, up by 31.5%. The quarterly full report, which published its Q4 2022 update in February 2023, states heavy building materials saw a value increase of 11.6%, with a noticeable price growth of 18.6%. Volume was down by -5.9%.
Lower-level heavy building materials categories that contributed to value growth the most included cement, insulation, lintels and plasterboard. A quarterly review against 2021’s applicable quarter also shows the increased difficulty the sector experienced as the year went on. The first quarter saw growth of 17.7% in value, followed by 4.1%, 4.3% and 2.9% in quarters two to four. Price growth was consistently high each quarter, sitting between 15.0% and 17.7%, while volume started at 1.5% in quarter one and dropped to -11.6% in the fourth quarter. Landscaping especially was under pressure, with quarter four volumes down by -20.5%.
Emile van der Ryst, senior client insight manager at Trade, said: “2023 brings more uncertainty as the war in the Ukraine continues and tensions between the US and China continue to simmer. The Chinese property sector is forecasted to struggle, while there is also an expectation that UK house prices will drop. The recent news of a recession that isn’t as deep and long in the UK is a welcome glimmer of hope to start the year with.”
With forecasts for 2023 predicting a further slowdown in the first half of the year, general product availability should have an opportunity to recover before the market begins to recover in the second half of the new year. The latest quarterly estimate from the Office of National Statistics (ONS) found that quarterly construction output increased by 0.3% in Q4 2022 compared to Q3 2022.
Krystal Williams, managing director at Pavestone UK Ltd, added: “Sales continued to slow in Q4. Pre-Covid we would expect a lull in sales in December and January when the weather is typically unforgiving for landscaping projects, however we’ve lost a lot of seasonality over the past few years thanks to the milder winters. What makes it harder for us to assess the true state of the market is that we only see the sales we make to merchants – not how much stock they are selling.
“Looking ahead to 2023, DIY is likely to be a growth area as homeowners save money on labour costs by laying paving themselves. The RMI market is certainly not a write-off.”
The BMBI includes a growing panel of industry experts. In each quarterly full report with monthly updates, they comment on the market with a particular focus on the story behind the trends. Builder Merchants handle an extended range of building materials and components (for example doors, windows, interior furnishing materials, insulation materials, tiles, cement, mortar, adhesives, sealants, nails, hardware products, pipes, ironware, paint) and generate their turnover with professional end users. Examples include Jewson, EH Smith, Bradfords Building Supplies, Howarth Timber and Building Supplies.
Steve Stringer, procurement and cost reduction specialist, said: “Unlike data from sources based on relatively small samples or estimates, or sales from suppliers to the supply chain, this up-to-date data report is based on actual sales from merchants to builders and other trades.
“Therefore it is a useful indicator for the trends within the construction and maintenance industries and helps clients and ERA understand price movements in context.”