The Builders Merchant Building Index

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VALUE EX VAT Index Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17
Total Builders Merchants 100 101.3 110.0 113.6 111.4 115.7 111.1 113.7 113.8 112.3 113.6 77.1 94.7 100.5 122.8 106.7 121.1 120.2
Timber & Joinery Products 100 101.6 107.1 108.9 106.0 112.1 107.8 112.2 113.3 112.8 113.7 76.1 99.1 100.9 121.2 102.9 117.1 116.7
Heavy Building Materials 100 100.8 110.1 114.3 111.7 116.2 111.9 114.4 114.6 113.4 114.1 77.0 94.0 100.1 123.0 106.9 122.5 121.2
Decorating 100 101.3 106.6 107.5 105.4 108.1 107.8 112.5 109.8 108.3 110.4 76.3 92.8 97.0 115.6 98.8 111.0 111.8
Tools 100 99.7 104.1 106.9 99.8 104.0 101.5 102.4 104.6 106.5 111.3 74.8 97.6 101.7 120.7 97.2 107.0 109.9
Workwear & Safetywear 100 106.5 105.5 96.3 96.5 107.6 98.5 98.6 101.0 110.9 133.2 72.6 109.5 102.7 114.1 85.1 101.4 99.4
Ironmongery 100 108.9 113.0 112.8 110.9 112.8 111.0 115.8 119.8 118.0 119.9 84.6 107.5 109.4 129.2 107.5 121.6 124.5
Landscaping 100 88.9 115.7 137.7 144.2 144.7 132.0 129.2 119.9 110.2 97.2 62.4 71.0 87.7 129.5 138.1 153.1 146.9
Plumbing, Heating & Electrical 100 114.6 115.2 110.8 101.4 103.3 100.5 103.6 111.7 116.0 132.4 94.0 114.9 116.1 128.7 98.3 109.7 110.0
Renewables & Water Saving 100 71.8 72.5 67.1 64.8 75.5 63.7 63.1 72.8 61.2 73.4 42.4 68.1 76.2 90.3 68.2 70.2 69.9
Kitchens & Bathrooms 100 109.0 110.5 106.7 98.0 107.6 101.7 105.3 111.4 109.4 121.7 83.8 98.1 110.2 123.6 99.3 111.3 118.3
Miscellaneous 100 107.4 112.9 113.1 107.4 113.3 115.3 114.5 115.7 113.6 122.2 92.6 113.2 108.8 124.4 103.4 120.5 113.7
Services 100 102.3 114.6 111.3 116.7 116.1 115.5 115.2 111.1 108.3 107.1 81.3 87.8 95.0 115.0 100.6 112.4 109.7

Source: GfK's Builders Merchants Total Category Report - July 2014 to June 2017

Latest Overview - Q2 2017

Value growth continues for the Merchants in the second quarter but with Consumer Confidence falling will the growth continue?

The BMBI report shows strong value growth in the first half of 2017, up 3.8% year on year. Quarter 2 has slowed compared to Quarter 1 in absolute terms but the timing of Easter shifted the bank holiday closings into the second quarter affecting the quarter on quarter positions. For this reason reviewing the year to date provides the clearest indication of market performance. Value growth year on year for the first half of 2017 was driven by the major categories of Timber and Joinery (+4.6% – particularly Cladding and Stairs and Stair Parts) and Heavy Building Materials (+4.1% – primarily Lintels, Roofing Products and Bricks and Blocks). Only Services and Work and Safety Wear have shown decline.

With low interest rates and property value growth slowing but still in positive territory, renovation and improvements on the home remain good long term investments for UK homeowners. The UK’s demand for new homes and vocal government backing give plenty of reasons to be positive, however, we also see a number of reasons to be cautious.

Firstly, GfK’s Consumer Confidence Index, down two points in July to -12, the same level seen after the Brexit vote suggests consumers’ sentiment is weakening and if we look at the questions relating to planned major home improvement projects and planned moving/house building they both show significant declines on the previous quarter1.

Secondly, borrowing continues to grow while savings rates have dropped, down 70% in Q1 year on year2. The Consumer Price Index surprisingly declined in June, dropping back to 2.6% and reducing the short term likelihood of a rate rise2. However this rate still outstrips wage inflation continuing to negatively impact consumers. With home improvement projects funded through savings or loans, this erosion of savings will only add to the reliance on borrowing.

September will offer us further insight, with the delivery of the Planning Applications data for the second quarter of 20173. Will we see this decline in consumer confidence shift into these planning application numbers, later releases or at all?

Sources:
1.GfK Consumer Confidence Index July 2017 – “Are you planning to purchase or build a new home over the next 2 years…” and “How likely are you to spend large sums of money over the next 12 months on home improvements…”
2.ONS June 2017
3.Department for Communities and Local Government – Planning applications in England: January to March 2017– Published 15 June 2017

For additional, deeper category insights and benchmarking please contact Richard Frankcom at GfK.

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