The Builders Merchant Building Index reports a 7.2% decline in merchants’ takings in Q1 2024.
- First-quarter sales decreased by 7.2% in value and 8.7% in volume year-on-year.
- Price increases were marginal, with a 1.6% rise noted despite market challenges.
- Only three out of twelve product categories saw growth, with Workwear & Safetywear leading at 11.5%.
- Market optimism rises with upcoming elections and potential economic improvements.
In the first quarter of 2024, the Builders Merchant Building Index highlighted a notable downturn in merchants’ takings, reflecting a 7.2% drop in value compared to the same period in 2023. Additionally, there was an 8.7% decrease in sales volume, accompanied by a modest increase in prices by 1.6%.
The report detailed disparities among product categories, with only three out of twelve experiencing growth. Workwear & Safetywear emerged as the top performer, increasing by 11.5%, while the two largest categories, Timber & Joinery Products and Heavy Building Materials, saw significant declines of 10.6% and 9.4% respectively. Renewables & Water Saving products suffered the most with a decrease of 26.5%.
When comparing quarters, there was a 3.5% increase in takings in Q1 2024 over Q4 2023, attributed to a 3.9% rise in volume sales, though offset by a 0.4% price reduction. Notably, this period included three extra trading days, yet like-for-like sales were down 1.4%.
March 2024 was particularly challenging, with takings plunging by 13.6% compared to March of the previous year. Volume sales fell by 14%, tempered slightly by a 0.5% price increase. While three fewer trading days were reported, the like-for-like sales decline was only 0.6%. Heavy Building Materials and Timber & Joinery Products experienced substantial year-on-year sales drops of 15.2% and 17.7% respectively.
Insights from John Newcomb, the chief executive of the Builders Merchant Federation, attributed the lacklustre results to the lowest housing start numbers in over a decade, poor consumer confidence, and prolonged adverse weather. However, with the announcement of a general election, there is renewed hope for economic revitalisation, including potential public and commercial projects bolstered by lower inflation and interest rates.
Mike Rigby of MRA Research reflected on the bleak conditions, noting a 20% reduction in new home registrations and pointing to unfavourable weather and stagnant interest rates as contributors. Despite these conditions, Rigby identified a positive trend, citing a 15.9% increase in new construction orders and improved consumer confidence as signs of potential recovery.
As builders’ merchants navigate a challenging first quarter, economic indicators suggest possible improvement ahead.
