Inflation trends continue to drive growth in the East Midlands building materials’ sector

Inflation trends continue to drive growth in the East Midlands building materials’ sector
The East Midlands is among the top performing regions for growth in the building materials supply chain for the third quarter of 2022.

The East Midlands is among the top performing regions for growth in the building materials supply chain for the third quarter of 2022.

However, the Builders Merchant Building Index (BMBI) for Q3 2022, from national trade body the Builders Merchants Federation (BMF), found growth continues to be driven by rising prices rather than an increase in sales.

In the East Midlands, the value of sales increased by 8.2% in the third quarter compared to the same period in 2021.

Jim Parlato, the BMF’s East Midlands Regional Chair, said: Sales growth in the East Midlands has been driven by price inflation as volumes year-on-year have fallen again in Q3.

“The worst hit sectors are the retail and domestic Repair Maintenance and Improvement (RMI) market, in particular the smaller projects and whilst house building and commercial RMI have shown more resilience sales, values and volumes have also started to fall in these two areas this quarter.

“I fear the outlook for 2023 is more of the same with the severity of the downturn strongly linked to inflation and cost of living effect.

The BMBI reveals that, across the UK, the total value of sales for July to September 2022 were 4.3% higher than the same period last year – but while prices increased by 14.6% the volume of sales dropped by 9%.

John Newcomb, CEO of the BMF, said: “We have seen a pattern emerge across the East Midlands and the UK throughout the year where sales value increases have been largely driven by price inflation rather than volume growth.

“Following the Autumn Statement commercial and retail customers alike will increasingly feel the combined squeeze of rising prices, interest rates and taxes.

“This will undoubtedly feed into the next 12 months as the Chancellor’s measures to counteract recession further reduce consumer spending power.”

The BMBI includes a breakdown of sales figures by region and is seen as a gold standard measure of sales activity in the building materials sector – an industry considered a key bellwether of the national economy and the ‘mood of the nation’ in terms of home repair, maintenance and improvement.

Using GfK’s point of sale tracking data, the BMF’s BMBI is drawn from over 80 per cent of builders’ merchants sales throughout the country, making it the most reliable source of data for the sector.

Emile van der Ryst, Senior Client Insight Manager – Trade at GfK added: “This consistent theme of price increases and volume declines mirrors much of what is seen across the UK economy and like other sectors there’s probably an expectation that volumes will continue decreasing.

“In September, GfK’s Consumer Confidence set a record low since tracking started in 1974, a clear reflection of the difficulties currently experienced.

“The final quarter of the year will be increasingly difficult, as highlighted by the Bank of England expecting a two-year recession.”

Figures from the BMF’s BMBI are used in the Department of Business, Energy and Industrial Strategy’s Monthly Construction Update.

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