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Merchant sales fall again

24 Jul 23 Builders merchants remain under pressure with sales again falling in May, both in terms of product volumes and revenue generated.

For several months builders’ merchants continued to see their revenues rise even as the amount goods sold had started to decline. This was because prices were going up so much. Now, however, the decline in volumes is outstripping even double-digit price inflation.

The latest Builders Merchant Building Index (BMBI) report shows the value of builders’ merchants’ sales was down by 6.0% in May compared to May 2022. Sales volumes fell by 15.1% with price inflation of 10.8%.

There was, however, one less trading day in May 2023 than in 2022; like-for-like sales were 1.3% lower by value.

Eight of the 12 product categories sold more this year than in May 2022. Renewables & water saving (up 42%) grew the most, followed by decorating (up 10%). Landscaping (down 13%) and timber & joinery products (down 18%) were the weakest.

Takings were up 12.4% in May compared to April 2023. Volume sales were up 14.1% month-on-month while prices decreased by 1.5%. With two extra trading days in May, like-for-like takings were up by just 1.1%. Both April and May were impacted by national holidays – Easter in April and the coronation in May.

Total merchant sales revenue in the year to May 2023 was down by 0.3%, with volumes down 13.6% and price inflation of 15.4%. With five less trading days in the most recent period, like-for-like sales revenue was 1.8% higher. Renewables & water saving products saw the best growth over the past year, with sales up 41%.

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Mike Rigby of MRA Research, who produces this report, said: “Britain celebrated the king’s coronation in May 2023, but there was no cause for celebration in the construction industry this month for the steepest drop in house-building activity since April 2009, with the exception of the disruption in the first couple of months of lockdown in 2020.

“The latest BMBI figures reflect the impact this slowdown is having further up the supply chain with falling sales volumes. Forecasts of a jump in monthly mortgage repayments of £500 for around one million households by the end of 2026 isn’t likely to kickstart the housing market any time soon either.

“But there is cause for optimism. While the cost-of-living crisis continues, inflation appears to be easing and there is growing resilience in the market. Consumer confidence has been recovering according to GFK’s Consumer Confidence Index, with an uptick of three points recorded in both May and June. That’s still a negative -24 but 12 months ago it was -41.

“As ever, parts of the market are thriving despite the tough conditions. Homeowners without mortgages and with savings are still spending on repairs, maintenance and improvements, and builders and trades who serve them are booked well into the future.”

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