The Builders Merchants Federation’s (BMF) Winter 2023 report has highlighted the expected incoming negative impact on building material sales.
The BMF correctly forecast annual builders’ merchants’ sales growth in the region of 6.7% in 2022, but price inflation was the main driver here, with sales volumes falling back to pre-Covid (2019) levels.
The Federation reported that there are signs of the market worsening during the coming year as the Chancellor’s measures to counteract recession may further reduce consumer spending power. Price inflation is set to continue through the first half of 2023 before gradually slowing, while sales volumes are likely to drop below 2019 levels.
Given this scenario, the BMF’s baseline forecast predicts negative growth of -1.6% in 2023 over 2022. As the pressures of inflation begin to settle in the latter half of 2023, the market is expected to return to growth, with average growth forecast at 2.1% in 2024.
Commenting on the forecast, Thomas Lowe, industry analyst/economist at the BMF said: “Persistent price inflation throughout 2022 caused a roller coaster of monthly growth for builders merchants. Unfortunately, that growth was a by-product of price hikes rather than units sold.
“The cost of living crisis is expected to last through 2023 and the pressure of inflation is still evident. Providing that the Spring Statement from the Chancellor does not drastically change the picture, we anticipate dipping into negative growth in 2023 before the market begins to recover in 2024.”
John Newcomb, CEO of BMF, added: “With so much volatility surrounding the general economic picture there, is considerable uncertainty forecasting demand for core markets such as domestic repair, maintenance and improvement work and housing, where higher mortgage rates and the end of the Help to Buy scheme are expected to slow new sales. Other areas of construction, however, continue to see strong demand, particularly for industrial, commercial, infrastructure and government projects.”
