Positive growth for merchants in Q1 2019

Merchants reported a strong start to the year with Total Builders’ Merchants value sales to roofers, builders and contractors up 5.9% in the first quarter compared with Q1 2018. Product categories that grew strongly included Timber & Joinery, up 6.6%, Heavy Building Materials, up 6.8%, and strongly seasonal Landscaping, which saw value growth of 15.6% as the year got off to a better start than 2018 with the milder weather.

Compared with Q4 2018, sales in Q1 2019 increased by 1.9%, but average sales a day (which takes into account the difference in trading days) were 3.0% lower over the same period.

Total sales in March 2019 were up 8.3%, with the milder weather impacting positively compared to the same period last year. Product categories that displayed the highest growth year-on-year were those related to external work. Timber & Joinery was up by 9.2% and Heavy Building Materials by 9.4%, while landscaping increased by 25.6% over March 2018.

Sales in March were 11.8% higher than in February on one more trading day, and average sales a day were up 6.5%.

March’s BMBI index was 121.6, with Landscaping (131.6) the top performing category.

Neil Hargreaves, Managing Director of Knauf Insulation and BMBI’s Expert for Mineral Wool Insulation, comments: “Robust demand for mineral wool insulation continues in 2019. Housebuilding remains buoyant in the Midlands and the North, offsetting a softening of demand in the South East. This has a positive impact on mineral wool insulation sales because houses built in these regions tend to be larger and so need more insulation.

“In some ways it’s difficult to assess the true underlying demand for glass mineral wool, as supply constraints remain a factor. Since mid-2018, the major manufacturers have had to restrict sales using allocation programmes.

“The Brexit elephant in the room continues to affect confidence across the whole industry, and has undoubtedly depressed construction activity. More directly, uncertainty is impacting manufacturers’ and merchants’ operations. As the March deadline approached, prudent businesses stockpiled raw materials and imported goods in case of ‘No Deal’ disruption. The decision now is whether to maintain those stockpiles through to the new deadline of October 31^st.

“Despite its prominence, Brexit isn’t the only thing on the political agenda affecting the industry. This year we expect the government to consult on further changes to the building regulations, with a particular focus on Part B (fire safety) and Part L (energy efficiency). Another significant event was March’s announcement of the planned Future Homes Standard.”

BMBI Experts speak exclusively for their markets, explaining trends, issues and opportunities.