The Builders Merchant Building Index

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VALUE EX VAT Index Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Total Builders Merchants 100 119.1 107.2 106.4 124.4 124.0 110.6 112.9 122.9 123.1 106.4 105.6 76.4
Timber & Joinery Products 100 117.1 108.1 109.5 122.9 128.3 114.7 116.7 122.8 122.4 107.4 104.3 78.0
Heavy Building Materials 100 120.7 107.9 104.9 124.2 123.5 109.9 112.0 122.2 123.0 105.0 104.8 75.1
Decorating 100 113.9 102.3 103.0 112.8 116.2 106.5 107.5 111.0 116.6 106.0 102.5 56.3
Tools 100 109.8 104.7 104.2 109.6 110.1 104.7 103.0 100.2 101.4 96.0 90.3 41.0
Workwear & Safetywear 100 100.9 110.0 110.9 97.3 100.6 110.9 103.2 98.3 105.0 117.9 129.1 67.5
Ironmongery 100 125.3 115.2 117.8 122.3 123.7 115.8 120.5 122.6 124.8 113.8 112.7 65.0
Landscaping 100 130.4 93.8 91.4 155.5 140.6 98.7 105.6 157.4 142.5 95.3 102.6 138.8
Plumbing, Heating & Electrical 100 113.4 122.7 129.5 120.1 117.2 128.1 129.2 115.8 120.1 125.8 121.0 53.9
Renewables & Water Saving 100 69.0 69.1 77.1 73.2 68.7 63.6 71.2 66.3 76.7 68.3 79.2 31.5
Kitchens & Bathrooms 100 115.2 111.6 114.6 116.3 117.6 110.6 115.9 114.8 121.4 114.6 111.9 48.4
Miscellaneous 100 120.5 111.4 113.9 115.7 112.4 110.1 116.5 116.6 127.4 115.0 129.5 63.3
Services 100 112.4 100.7 98.9 117.3 116.1 106.4 98.8 113.9 118.3 107.7 102.0 72.8

Source: GfK's Builders Merchants Total Category Report - July 2015 to June 2020

Quarterly Overview - Q2 2020

This year is probably unique, the most memorable we’ve ever had, and we still have some way to reach before 2021. The initial shock and fear have been replaced by the realisation that this is a long-term problem and a lot needs to happen before the world returns to what was previously considered normal. Unfortunately, this also applies to the Builders Merchants sector, with an ongoing fight for business survival the key focus.

At the end of Q1 the sector was down by -6.7% in value, with Q2 down by -38.6%. Individually, April, May and June couldn’t have been more different. April, with almost a full lockdown, saw a year on year decline of -76.5% as most merchants only provided essential deliveries to active trade account holders. May recovered to -39.9% as restrictions were relaxed, while June grew 2.2% thanks to a combination of relaxed restrictions, good weather and a booming Landscaping category.

Landscaping surged with June to June growth of 50.3%, while the other core categories of Heavy Building Materials and Timber & Joinery saw increases of 0.2% and 1.4% respectively. Landscaping growth was driven by Garden Walling / Paving, Fencing & Gates, and Decking, which more than doubled in value from June to June.

Year to date Heavy Building Materials and Timber & Joinery decreased -23.9% and -25.9% respectively against 2019. The former’s June recovery was driven by strong Cement, Aggregates and Roofing performance, while the latter had a strong Timber performance in June. All of this provides a glimmer of hope for the remainder of the year.

Looking ahead the good summer weather could lead to further growth, but the ever-present threat of a second wave remains. The next couple of months will be crucial in helping the sector recover most of the losses incurred during April and May. Continued development of digital platforms across the sector provides a potential roadmap for the future, hopefully offering a solution to the second wave threat. The remainder of the year is impossible to predict, but we all know this is going to be a very bumpy ride.

John Newcomb, CEO BMF, adds:

The results for Quarter 2 show a tale of two halves – the first half reflecting the shutdown of much of the construction industry, and improving trading conditions thereafter

The initial impact of Covid-19 was industry-wide, with figures from the Office of National Statistics (ONS) and the Construction Products Association reflecting the experience at merchant counters during the last quarter.

The ONS reported a record 35.0% fall in construction output in Q2 compared to Q1 2020. Private housing was the largest contributor in new work (down 51.2% on the previous quarter), with private housing RMI (down 46.5%) the largest contributor in repair and maintenance. These two sectors form the mainstay of merchants’ business and the quarter on quarter falls in both sectors were the highest ever recorded.

ONS figures show that April was the worst month, with May showing month on month growth of 7.6% and monthly construction output increasing by a record 23.5% in June. Despite this strong monthly growth, construction output in June 2020 was still 24.8% below February 2020 – the last full month before the impact of Covid-19

Manufacturing also suffered in Quarter 2. The CPA Q2 2020 State of Trade reported the worst quarterly performance since the 2008/9 recession, with 81% of heavyside manufacturers and 68% of lightside manufacturers recording a fall in sales compared to Q1 2020.

The confusion caused by inconsistent Government messaging in the first few days of the crisis has also led to ongoing issues. Along with many construction sites and builders’ merchants, some manufacturers temporarily closed before putting Covid-secure measures in place. Unfortunately, closing production lines led to shortages in certain product areas which is taking some time to unwind.

On the positive side, furloughed workers took the opportunity to undertake DIY projects – boosting paint and landscaping sales – and construction workers returned to site relatively quickly to complete existing projects.

More worrying is the forward data released by the ONS. New orders decreased by a record 51.1% in Q2 compared with Q1 2020. The impact of the Covid-19 crisis looks set to continue to impact results for the rest of the year and beyond.

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