The Q4 2022 figures from the Builders Merchants Building Index (BMBI), published in February, show +2.9% total value sales growth to builders and contractors yearon- year, with +16.4% price inflation compensating for falling volumes (-11.6%). With one fewer trading day this year, like-forlike value sales were +4.6% higher.
Ten of the 12 categories sold more in Q4 2022 compared to the previous year, with renewables and water saving growing the most (+48.6%). Plumbing, heating and electrical (+18.6%) and work wear and safety wear (+14.8%) both recorded their highest quarterly revenues. Only landscaping (-5.9%) and timber and joinery products (-11.5%) sold less.
Comparing Q4 2022 with Q4 2019, a more normal pre-Covid trading year, sales for October to December 2022 were +24.4% higher than the same months three years ago. Volume sales were -7.6% down and prices were up +34.7%. All categories sold more, including timber and joinery products (+27.9%).
Quarter-on-quarter, total value sales were -13.9% down in Q4 compared to Q3. Volume sales were -18.3% down while prices were up +5.4%. With five fewer trading days in the most recent period, overall like-for-like sales were -6.6% lower than Q3. Value sales for timber and joinery products (-16.6%) were significantly down.
“Quarter four saw a continuation of demand softening, which we evidenced in Q3, across the majority of timber products,” said Simon Woods, European sales, marketing and logistics director, West Fraser and BMBI’s expert for wood-based panels.
“Construction is slowing, with housebuilding looking particularly vulnerable. Mortgage approvals in Q4 were dramatically down on previous data, as was private housing RMI. The slowing is driven by the interest rate, inflation and supply chain challenges which all affect our industry. Consumer confidence is low, and the media seem intent on keeping it that way.
“The timber industry is feeling the effects of this situation. Lower volumes and softening pricing set against a backdrop of high (and often rising) manufacturing costs are leading to downtime in many mills across the UK and Europe. Panels, sawn timber and so on all saw restricted manufacturing during Q4, as demand remained lower than production capacities. The supply chain continued to reduce inventories as softening market demand continued from Q3 and year end inventory targets came into view.
“If we look for positives (and we should) then inflation will fall throughout 2023, forecast to end the year below 4%; mortgage rates are falling with the main lenders starting to compete for business again; the prime minister seems to have stabilised government – at least when set against what went directly before him; and house prices are falling to allow improved affordability.
“Quarter four was tough, and 2023 will also be tough. The timber industry is used to the fluctuations of changing markets, as a considerable part of the sector is commoditised, so it will weather the storm, as it has done many times before. As timber continues to be the answer to many of the construction sector’s environmental challenges, the future looks promising….it just may need to be patient and allow the current market to recover.”
