Data collected through the Builders Merchants Federation (BMF) show that sales growth slowed throughout the fourth quarter, indicating that not a lot of Brexit stockpiling went on in 2018. If it did, then materials consumption has really slowed. However, anecdotal evidence suggests that the Brexit stockpiling has only taken hold in 2019, with the UK scheduled to leave the EU on 29th March.
The Builders Merchants Building Index (BMBI) reports that while total sales were 3.1% higher, by value, than in Q4 2017, this was largely due to October’s 6.8% year-on-year growth. November sales grew by just 0.8% year-on-year and December by 1.0%.
Factor in inflation and the rising cost of imports due to exchange rate movements, and it is clear that sales volumes are in decline, the BMF says.
The BMBI itself plummeted from a high of 131.8 in October to 77.4 in December.
In terms of sales value, Timber & Joinery Products had the strongest fourth quarter, finishing 6.1% ahead of Q4 2017. Landscaping (+5.2%), Plumbing Heating & Electrical (+4.4%) and Decorating (+4.1%) also delivered above the average. Seven categories under-performed the total sales average, including Heavy Building Materials, which is by far the largest category, (+1.9%) and Kitchens & Bathrooms (-0.9%).
Fourth quarter sales at builders’ merchants are typically lower than the third quarter summer months. No surprise, then, that total average daily sales were down 4.9% on the previous quarter. Only two categories strongly bucked the trend, with Workwear & Safetywear up 17.7% and Plumbing Heating & Electrical 16.6% higher, quarter-on-quarter.
Year-on-year, 2018 total merchant sales finished 3.8% ahead of 2017 (which itself was 6.3% up on 2016). Four categories did better than average in 2018, led by Plumbing Heating & Electrical (+7.1%), with Timber & Joinery Products (+7.0%) just behind. Six categories grew more slowly, once again including the largest category Heavy Building Materials which recorded a 2.5% increase over the year.
BMF chief executive John Newcomb said: “The year ended on a subdued note for builders’ merchants’ sales. As the deadline for the UK to leave the EU draws ever closer, the uncertainty that surrounds the terms of our departure – in particular, the terms relating to how the UK will trade with Europe post-Brexit – is not helping our sector. In our current state of limbo, it is no surprise that both businesses and home-owners are deferring investment decisions. But until the Brexit riddle is solved, no-one can begin to predict what will happen next.”
Malcolm Gough, group sales & marketing director of landscaping products supplier Talasey Group, said: “Everyone is [now] buying huge quantities of stock and finding ways to store volume. This is a concern because we, along with other landscape suppliers, import from or through a European port. If the politicians get Brexit wrong, we will all be affected."