The Builders Merchant Building Index

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VALUE EX VAT Index Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sept 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 May 20 Jun 20 Jul 20 Aug 20 Sept 20
Total Builders Merchants 100 122.0 129.3 117.2 132.8 117.7 118.9 126.0 113.4 78.4 105.3 107.6 103.8 78.7 121.4 131.9 113.3 128.7
Timber & Joinery Products 100 122.3 127.9 118.3 130.9 117.0 119.3 127.4 114.7 77.4 107.2 104.9 100.8 80.5 126.7 140.3 120.6 139.3
Heavy Building Materials 100 121.1 129.2 116.2 132.5 117.3 119.1 125.9 112.2 76.3 103.8 106.2 104.4 78.5 116.4 125.6 108.6 125.4
Decorating 100 109.7 115.1 108.1 124.2 113.2 112.5 122.1 113.1 81.6 104.9 105.8 96.7 54.8 94.4 112.4 100.1 113.1
Tools 100 99.5 104.5 96.7 106.7 97.3 100.0 111.8 102.8 70.3 94.8 96.2 80.0 35.1 79.3 99.0 85.8 98.5
Workwear & Safetywear 100 95.5 100.1 99.3 108.8 95.5 110.9 134.6 134.3 83.2 119.9 128.0 139.3 66.6 98.2 131.7 98.4 111.1
Ironmongery 100 122.5 127.6 117.7 133.1 120.6 120.7 131.9 118.9 88.4 118.4 115.9 103.8 58.9 108.8 128.7 113.6 127.3
Landscaping 100 154.5 171.1 146.6 165.4 136.7 125.3 119.1 98.2 66.7 90.5 105.5 111.7 152.5 223.7 208.2 157.2 161.0
Plumbing, Heating & Electrical 100 117.6 120.2 109.7 123.8 111.8 124.6 141.5 134.6 98.5 128.9 126.9 107.1 51.8 84.4 103.1 95.3 115.4
Renewables & Water Saving 100 64.5 61.4 73.1 76.1 78.0 76.0 74.6 72.2 54.1 79.7 88.0 69.9 26.7 55.1 69.3 58.2 71.9
Kitchens & Bathrooms 100 115.2 116.5 112.7 129.2 116.4 118.5 127.6 125.8 88.3 111.4 120.1 104.0 43.7 87.3 111.1 106.3 117.3
Miscellaneous 100 113.6 122.5 113.7 135.8 118.5 128.0 131.6 121.1 90.8 120.3 115.1 152.9 55.1 98.0 112.4 98.2 122.3
Services 100 113.6 121.8 106.4 125.6 116.0 113.2 122.6 112.9 87.2 100.1 103.2 102.7 70.2 105.9 119.4 109.2 119.2

Source: GfK's Builders Merchants Total Category Report - April 2018 to September 2020

Latest Overview

2020 has been a unique year worldwide, but the end of the year has provided a glimmer of light at what has been a long and arduous tunnel. Stock markets worldwide have started to bounce back on the news of a vaccine breakthrough and comments are being made about life returning to normal by the end of next year.

The merchant trade industry is already showing signs of returning to normal, with these Q3 results emphasizing its resilience. By the end of June, the year to date figures were down by -23.9% in value. However, these figures bounced back to -15.4% by September thanks to a 2020 Q3 performance that saw growth of 1.0% versus 2019 Q3. September especially stood out with growth of 8.3%, albeit with one extra trading day compared to 2019.

The cornerstone of this Q3 growth has been the core categories again. Landscaping has been the big winner in 2020, with its growth up by 24.2% in value from 2019 Q3. In addition, Timber & Joinery is up by 3.5% in value versus last year, while Heavy Building Materials only saw a decrease of -1.0%.

Landscaping’s 2020 Q3 performance has been driven by Decking, Garden Walling / Paving and Fencing & Gates, with all of these seeing substantial growth from last year. Timber has been the key driver in Timber & Joinery growth, with Cladding also contributing. Heavy Building Materials’ small decline was due to a mix of both single digits increases and decreases across the board, with the best performing subcategories being Aggregates, Bricks, Cement, and Roofing Products.

Only Landscaping and Workwear & Safetywear have seen growth year to date, increasing by 1.5% and 1.2% respectively. Workwear & Safetywear Q3 growth was also up by 8.0% in value as COVID-19 safety requirements remain at the forefront.

There is an expectation that the remainder of the year will be more challenging due to the second lockdown, but the sector will benefit from being allowed to remain open for trading. Digital development will continue at a rapid pace, while Brexit will bring its own challenges. The recent performance does however underline some positivity after this turbulent and uncertain year.

John Newcomb, CEO BMF, adds:

The results for Quarter 3 show construction making a V-shaped recovery from the initial shock of the first Covid-19 lockdown, but is this set to continue?

After reporting a record fall in construction output in Q2, the latest report from the Office of National Statistics (ONS) shows record growth in Q3, with construction output growing by 41.7%, with new work and RMI growing substantially.

New work was up by 40.8%, with private new housing the largest contributor, growing by 84.4% in Q3 2020 compared with Q2. Repair and maintenance grew by 43.4%, with private housing RMI the largest contributor, growing by 70.9% in Q3 2020 compared with Q2.

However, although ONS found construction output grew for the fifth consecutive month in September, at 2.9% this was the lowest rise in that time. The level of construction output in September 2020 was 7.3% below that in February, with only infrastructure and private new housing having returned to above their pre-pandemic levels of output.

The Construction Products Association’s State of Trade Survey for 2020 Q3 found that one-third of heavyside manufacturers and almost a half (48%) of lightside firms reported a rise in sales compared to Q2 2020. That said, product sales remained lower compared to the same period last year.

On a more positive note, property transactions for September reflect the continuing release of pent up demand added to the initial effect of the stamp duty holiday, with mortgage approvals above February’s pre-Covid levels. The latest UK Residential Survey from the Royal Institution of Chartered Surveyors (RICS) also reports strong demand continuing to drive housing sales.

The level of activity over the summer and early autumn has been encouraging, but we must also recognise that this has been against a backdrop of furlough payments, stamp duty holidays and continuing work on existing sites. To date the government has been largely supportive of construction and housing, with initiatives such as the stamp duty holiday and the Green Homes Grant, which has just been extended through to March 2022. But with lockdown measures continuing throughout the nations of the UK, we are likely to see more volatility in the coming months.

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