RCI Column – Subdued start to 2020

At the time of gathering the data for this report, our sector had yet to experience the more widespread scale and impact of the Covid-19 crisis we are seeing today. Nevertheless, it’s been a slow start for merchant sales.

Year-on-year

Total Builders’ Merchant value sales to roofers, builders and contractors in January 2020 were down -2.6% compared to January 2019. Seven categories sold less, with Timber & Joinery Products (-7.0%) weakest, followed by Tools (-6.1%) which had its lowest average sales a day since BMBI data was first recorded in July 2014. Heavy Building Materials (the largest category) was down -2.7%.

Month-on-month

Sales between January and December are always affected by a significant difference in the number of trading days (22 in January 2020 and 15 in December 2019). As a result, total January sales were up +34.4%. However average sales a day (adjusted) provides a more meaningful comparison, with January down -8.4% compared to December.

Other periods

Sales in the 12 months February 2019 to January 2020 were marginally down -0.5% on the same period a year earlier, with one less trading day. Four categories sold less: Tools (-6.7%), Timber & Joinery Products (-2.0%), Plumbing Heating & Electrical (-0.8%) and Heavy Building Materials (-0.7%).

Index

January’s BMBI index was 105.3, with one additional trading day. For Heavy Building Materials it was slightly lower at 103.8.

Midland Lead Sales & Marketing Manager Lynn Street and BMBI’s Expert for Lead, comments: “The main impact of ‘post-Brexit Britain’ has not yet been felt within the industry as a whole and we still have some time to go until the market settles down. There remains a lack of confidence, and to a large extent there are still many uncertainties. Confidence will grow when Government confirms spending plans within construction and, in particular, new housing.

“For the lead industry specifically, although we export many products throughout the world, we don’t rely on import for raw materials as they are sourced and recycled within the UK, therefore there will be little or no direct impact.

“Although we are in the hands of bureaucracy, governed by current negotiations, that doesn’t mean that our industry will come to a stand-still. It is clear that builders’ merchants, small and large, are seeing the benefit of trading online. Every week we speak to merchants who are making significant investment in online trading. This is a positive step for many companies and demonstrates that post-Brexit, this sector is continuing to adapt and grow.

“One of the biggest threats we are currently facing as a country is the continuing spread of Coronavirus. While goods and shipping containers remain quarantined it affects the movement of goods in the UK as well as overseas. Unfortunately, there are no clear answers to this current situation but this will most certainly have a negative, but hopefully short-term, impact on our sector.”

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.

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