Builders Merchants Federation says government measures to fight recession could hit material producers

Building material sales will suffer a downturn this year due to economic uncertainty in the industry, according to a new report.

The Builders Merchants Federation’s (BMF) latest forecast found sales of materials would drop by 1.6% in 2023, compared to a rise of 6.7% last year.

The trade body said price inflation had been the main driver of sales growth during 2022, with actual sales volume falling back in the year to pre-covid levels.

timber frame

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Sales of building materials are expected to slip this year

It said there are signs the market will continue to worsen over the coming year as the government’s measures to counteract a recession could further reduce spending power.

The forecast expects price inflation will continue through the first half of 2023 before gradually slowing, while sales volumes are expected to drop below 2019 levels.

> Also read: Construction activity falls at fastest rate since 2020 as housebuilding drops off

BMF industry analyst Thomas Lowe said: “Persistent price inflation throughout 2022 caused a roller coaster of monthly growth for builders merchants. 

“Unfortunately, that growth was a by-product of price hikes rather than units sold. The cost of living crisis is expected to last through 2023 and the pressure of inflation is still evident.”

As inflation pressures begin to settle in the second half of this year, the market is expected to return to a growth of 2.1% during 2024, according to the forecast.

BMF chief executive John Newcomb added: “With so much volatility surrounding the general economic picture there is considerable uncertainty forecasting demand for core markets such as domestic repair, maintenance and improvement work and housing, where higher mortgage rates and the end of the Help to Buy scheme are expected to slow new sales. 

“Other areas of construction, however, continue to see strong demand, particularly for industrial, commercial, infrastructure and government projects.”