“Economically speaking, 2023 will economically go down as one of the worst in recent memory for the UK, with ONS figures indicating a technical recession at the end of 2023. Inflation has come down at a slower than hoped for rate, and is expected to be a factor in the immediate future. This backdrop had a noticeable impact on the merchanting sector which has seen a difficult year after two years of strong growth. A challenging year was widely expected within the sector, but the extent of it wasn’t.
The headline value number shows a full year decline of -5.1%, with volume sitting at -13.7% and price growth at 10.0%. Almost half of all volumes tracked come from Bricks and Blocks and these have seen higher than market average price growth, which is calculated by dividing value with volume. A recalculation of the full year dataset shows that price growth for the whole sector drops down from the aforementioned 10.0% to only 3.4% when these two categories are excluded.
A quarterly review compared against the same quarters from 2022 show value declines remaining stable each quarter, going from -5.4% in Q2 to -5.7% in Q4. Volume is down by -12.0% in both of the past two quarters, but again improves to -4.4% in Q4 when Bricks and Blocks are removed. Price growth is the most revealing, with Q4 sitting at 7.1% against 2022 Q4, but dropping down to 1.1% if Bricks and Blocks are excluded. Plaster and Plasterboard were the other big ticket items that contributed to the higher price growth in the overall market.
On a category level Heavy Building Materials has seen a full year value decline of -3.2%, a volume decline of -17.7% and price growth of 17.6%. Other value indicators shows Landscaping down by -11.9%, with Timber & Joinery down by -14.4% due to a price decline of -14.6%. Decorating and Kitchens & Bathrooms were up by 9.0% and 3.2% respectively.
2024 should see a continuation of the challenges seen towards the end of 2023. Price growth as measured in the BMBI should noticeably drop off in the coming months, while volumes should recover in the second half of the year, hopefully paving the way for a market returning to growth in 2025.”