Bucking the trend

21 March 2018
by John Newcomb, BMF Chief Executive

Once again, sales through builders’ merchants appear to be bucking the general construction trend. By the end of February, the Office of National Statistics (ONS), the Construction Products Association (CPA), and our own Builders Merchants Building Index (BMBI) had each published performance figures for the final quarter of 2017. The headlines around the ONS and CPA stats spoke of construction output falling in the last three months of the year, with output forecast to remain flat in 2018. In contrast, the BMBI found that builders merchants sales in Q4 2017 outperformed the same period in 2016, with sales values increasing in every category. The story was much the same when comparing builders merchants sales during the whole of 2017 with 2016, with every major category reporting growth, notably a 5.1% increase for the largest product category, heavy building materials.

The difference is down to the performance of the sectors mainly served by builders merchants. While private housebuilding is forging ahead, assisted by Help to Buy, and private domestic RMI work is holding up well, the same cannot be said for the commercial and industrial sectors, which have seen a sharp decline post Brexit, largely due to a lack of clarity as to future requirements.

Fortunately for merchants, the lion’s share of their sales is driven by the housing market, both new build and RMI. In both these sectors the ONS and CPA figures concur with the BMBI which found total merchant sales in Q4 2017 were up by 6.3% on Q4 2016. This is in line with the ONS report of continued growth in new private housing, up by 8.7% in Q4 2017 over the same period in 2016, with private housing RMI also up by 2.6%. The CPA was quoted saying that private housing output is now 28.8% higher than its pre-recession peak. By contrast, commercial output is 26.4% below its historic high, whilst industrial output is 28.5% lower.

Will these trends continue in 2018? On the plus side, the Bank of England, predicted to raise interest rates twice more this year, appears to have the confidence to now move towards normalising monetary policy. However, we have yet to see the full impact of Carillion’s demise, particularly on their many thousands of sub-contractors. If a significant number go to the wall, the effect is likely to be felt by every sector of the building and construction industry.

Data protection

Meanwhile, something that we are sure will happen this year is the implementation of the General Data Protection Regulations in May. These introduce greater protection of personal information but place a greater responsibility on businesses to secure that data.

Many merchants will already have plans in place to be certified compliant by the deadline. For those who would like further support, the BMF has a new Cyber Security service which will help members to reinforce information security and comply with the new regulations, while Halborns, who provide BMF Intelligent Employment Plus, are offering a GDPR HR Toolkit. We are also running a half day training course on 22 March to explain the issues and help delegates to move towards the solutions. To find out more, or to book your place on this timely training course email [email protected] or click here to book online.

This article appeared in the March 2018 edition of BMN