NuGen Properties

Builders’ merchant sales volumes fall again

The third quarter 9% fall in volumes, year-on-year, follows an 11% fall in the second quarter.

However, just like the second quarter, although volumes were down in Q3, sales revenue was up because prices have gone up by so much in the past year. Third quarter revenue was up by 4.3% on last year, although with one less trading day this year the per diem revenue lift was 5.9%.

The Builders Merchant Building Index (BMBI), which gathers and analyses point of sale data from 80% of the UK’s general builders’ merchants, also reveals that third quarter sales were down in comparison to the second quarter of this year. Sales revenue in Q3 2022 was 2.2% lower than in the previous three months; sales volumes fell by 5.5%; and prices increased by 3.5%.  However, with four more trading days during the third quarter, like-for-like sales revenue was 8.3% lower than in Q2 2022.

 Year to date indicators for 2022 show both Timber & Joinery (+0.6%) and Landscaping (+0.5%) remaining almost flat in value, with volume declines of -17.8% and -13.5% respectively, counteracting price growth. Sales volumes were down by -4.0% for Heavy Building Materials, with value up by +12.6%. All three categories have seen year-on-year price growth of between 16-22%.

Builders Merchants Federation chief executive John Newcomb said: “We have seen a pattern emerge throughout the year with sales value increases 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.”

GfK insight manager Emile van der Ryst, who crunches the numbers, 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.”

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