The latest figures from the BMF’s Builders Merchants Building Index (BMBI) confirmed a strong start to 2017 with a further three months of growth in the sales of building materials through UK generalist builders’ merchants in Q1. The relatively mild and dry weather throughout first quarter of the year helped to produce 5.9% total sales growth on Q1 2016.
The overall result was boosted by a particularly strong performance in March, although the 11.4% year on year total sales growth recorded for the month is a slightly artificial figure as a late Easter gave two more trading days compared to March 2016. Nonetheless, the adjusted growth figure of +2.6% per trading day for the quarter is a positive result against a backdrop of political uncertainty.
Tools (+8.8%), Ironmongery (+7.2%) and Plumbing, Heating and Electrical (+6.8%) were the fastest growing categories during Q1. The ability to start external works in a warmer, drier winter lifted sales in other areas with Timber & Joinery +6.7%, driven by timber and sheet materials; Landscaping +6.7%, largely due to sales of block paving and kerbs; and Heavy Building Materials +6.2% on the back of higher sales of bricks, blocks and insulation. All saw growth greater than the total builders merchants channel.
GfK’s Builders’ Merchant Point of Sale Tracking Data, which represents over 80% of the value of the builders’ merchant market, is used to create the Builders Merchant Building Index of actual sales to builders.
Commenting on the results, John Newcomb, BMF managing director said: “The good news is that the positive market trend experienced throughout the last three years continued into 2017. Trading was undoubtedly helped by a mild, dry winter, but if you look at these results in conjunction with the Federation of Master Builders’ Q1 State of Trade Survey of SME builders, the sentiment both amongst builders’ merchants and their SME builder customers is optimistic.
“However, all Q1 data was gathered before Theresa May called a snap election. There is always a period of uncertainty leading up to a national vote when people put plans on hold pending the outcome. We may well see a degree of stagnation in Q2 until the colour and shape of the new government is clear.
“Looking further ahead, stability in the property market is required. Every one of the major political parties has acknowledged the need for many thousands of new homes for sale and rent. We need to see those promises being delivered, which ever party comes to power.”
GfK Channel Manager, Ricky Coombes, believes the immediate outlook is largely positive: “Based on a backlog of project orders, the current outlook for the Repair Maintenance and Improvement sector is positive. The new build market is also healthy with the ONS reporting the highest level of new home registrations in 10 years in Q1 2017. Similarly, GfK’s April Consumer Confidence Barometer found consumers’ intentions to spend on property/renovation in the next 12-24 months at their highest levels in 10 years.
“That said, with inflation growing at a faster rate than wages, the squeeze may impact on consumers’ intentions to spend on home improvements. While anticipated price rises could lead to ever more price-savvy trade customers looking for the best deals.”