RCI Article – Small growth for merchants in Q1

John Sinfield - Knauf Insulation

Small growth for merchants in Q1

Total builders’ merchant value sales to roofers, builders and contractors were up 0.4% in Q1 compared with Q1 2017, with one less trading day this year, with average sales a day up 2.0%. Growth would have been stronger had it not been for the “Beast from the East” hammering the external product categories and Good Friday falling into March, removing a trading day.

March was down -8.6% compared with March last year, as a result of two fewer trading days, but January and February’s sales compensated, at +8.4% and +4.0% respectively delivering growth for the quarter.

Quarterly growth was driven by Timber, up +2.3%, alongside multiple internal product categories, notably Plumbing and Heating (+8.0%), Kitchens and Bathrooms (+3.6%), Ironmongery (+2.1%), and Decorating (+1.2%) – all suggesting that work stayed inside due to the poor weather.

External categories fared less well with Landscaping – where garden walling and paving were particularly badly affected – down -4.9%, and the major category of Heavy Building down 0.8% with Cement and Blocks feeling the freeze.

John Sinfield, Managing Director Knauf Insulation and BMBI’s Expert for Mineral Wool Insulation said: “Despite adverse weather conditions in February and March, it’s not all gloomy news for the construction industry. There has been a strong demand from housing across both the New Build and RMI (Repair, Maintenance and Improvement) markets. This has resulted in a fairly strong first quarter for Knauf, in many regions of the UK, not only in the South East.

“It is encouraging that the home energy performance is coming increasingly into focus – reflected in government policies and the financial sector. In April, Barclays bank announced a green mortgage. Discounted rates are available for buyers of new-build homes that achieve an A or B EPC (Energy Performance Certificate) rating. We also keenly await the outcome of the government consultation on ECO (Energy Company Obligations) currently taking place. This could enhance the support available for low income and vulnerable households to improve their homes’ energy efficiency.

“The shift towards higher thermal performance products continues, even compared with 12-18 months ago. For example, our 0.032 Lambda DriTherm cavity wall product range is seeing a significant uplift in demand as customers look to give their buildings a more thermally efficient envelope.

“Of course, fire safety performance of buildings remains a focus and a top priority for the industry. Non-combustible products are becoming more standard – they increase effectiveness, reliability and resilience in case of a fire. This is driving a strong demand for rock and glass mineral wool products.

“Looking ahead, the newest CPA (Construction Products Association) forecasts show flat growth for the rest of 2018. Despite this, again, there are positive areas – particularly large infrastructure projects and private housing.”

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

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.