Continuing economic uncertainty in building materials supply

A Coventry-based trade body has predicted ongoing uncertainty in the building materials sector into 2024.

The Builders Merchants Federation (BMF) has forecast negative growth of -3.5% in 2023 compared to 2022, down 1.4% from its previous forecast mid-year.

The Builders Merchants Industry Forecast Winter 2023 also estimates a further decline for Q1 of this year amid volatile market conditions, although year-on-year expects to see 0.4% growth towards the end of 2024, rising to 1% in 2025.

The BMF represents 950 merchant and supplier companies with over £44.9bn in combined sales of building materials in an industry considered a key bellwether of the national economy and reflection of the ‘mood of the nation’ regarding home repair, maintenance and improvement.

BMF CEO, John Newcomb said: “With 14 interest rate rises alongside the effects of a cost-of-living crisis taking their toll both on consumer confidence and the new house building market for well over a year, we have seen both volume and value sales through builders’ merchants fall during 2023.

“This mirrors much of what has been observed in the wider UK economy and its impact on the housing market.

“Against this background, we are unlikely to see a dramatic upturn in 2024, but we are cautiously optimistic that we will see the first signs of recovery.”

The Winter Forecast provides key market information and gives a clear indication of the direction of travel for the builders merchants’ industry.

Thomas Lowe is the BMF’s Industry Analyst and Economist. He said: “Arguably, the long-term economic health of the merchanting sector is improving as net inflation of materials settles faster than the macroeconomic picture.

“This may allow for a faster recovery once consumption starts to pick up again as pressures on household disposable income start to alleviate.

“Projections for interest rates to stay high for a prolonged period of time, combined with statistics outlining relatively stagnant GDP growth until the end of 2025 indicate that consumption across the economy is likely to be affected.

“This has resulted in our final 2023 projections to conclude at -3.5%, with a minor increase next year of 0.4% growth and an increase of 1% in 2025.

“However, market conditions are expected to remain volatile, so this figure may change and will be monitored closely.”