Merchant sector grows thanks to new builds
Builders merchants are a key route to market for us, so we are encouraged by the latest reports from the Builders Merchants Federation (BMF) that show the sector is performing well. The Builders Merchant Building Index (BMBI) is reported to have ‘experienced robust growth’ in 2017, with merchant sales as a whole finishing 4.8% ahead of 2016.
Q4 of 2017 was particularly strong, with sales to builders and contractors in this period increasing by 6.3% compared to Q4 2016. Heavy Building Materials – the category where lead sits – aided the Q4 growth, with a 6.4% increase.
Commenting on the latest figures, John Newcomb, BMF CEO said: “Our results have appeared out of kilter with headline figures from the ONS for some time, but if you drill down into their reports the results are comparable. The lion’s share of merchant sales is driven by the housing market. While private housebuilding is forging ahead, assisted by Help to Buy, and private domestic RMI work is holding up well, the same cannot be said for commercial and industrial sectors which have seen a sharp decline post Brexit. We remain optimistic for continued growth in 2018, but I’m sure BMF merchants will be factoring in a number of outside factors – from monetary policy to Carillion’s demise – that could affect trading.”
A similar picture is painted by market intelligence company ABI Barbour, which, looking at the start of 2018, shows a drop in private commercial work and repair and maintenance work. Yet, the one sector that continues to grow is new private residential, which increased by 0.8% in January compared to January 2017.
However, The Construction Products Association (CPA) has looked ahead and is forecasting a subdued growth for the construction industry as a whole in 2018: 0.2%, down from 3% in 2017. The reasons specified include the slowing of economic growth and the uncertain environment for business investment, specifically surrounding the uncertainty of Brexit.
Lynn Street from Midland Lead comments: “This is broadly positive news, particularly in such an uncertain climate. Merchants are crucial in effectively selling our product and providing the necessary materials needed for building and development.
“We’ll continue to support our merchants and provide them with what they need to maintain sales. This includes a range of tailored stock profiles and bespoke POS systems to aid end-user decision making. We also offer training to merchants so they can confidently discuss product benefits and uses and make recommendations to purchasers.”
We’ll continue to monitor industry analysis and bring you updates throughout the year.
