The Spring 2023 Forecast Report from the Builders Merchants Federation (BMF) reflects the continuing impact of rising interest rates and the cost of living crisis on building material sales.

Builders’ merchants saw their sales revenues fall by 2.3% in the first quarter of the this year and volumes decline by 16% compared to 2022, because inflation has made prices higher over the year.

The BMF says that while the market for repair maintenance & improvement (RMI) work has been performing better than house-building recently, this may not continue. The cost of living crisis, with interest rates putting a strain on disposable incomes, is expected to soften demand in the RMI sector. Added to this, the new homes market is further affected by the end of the Help to Buy scheme on 31st March, with new home registrations down on 2022.

Given this scenario, the BMF’s baseline forecast now predicts negative growth of -1.4% in 2023 sales revenue over 2022 . While this is slightly ahead of the BMF’s previous 2023 forecast (-1.6%) there is less optimism for market recovery in 2024. The current prediction puts average growth forecast at +1.3%, whereas the previous forecast was more positive at +2.4%.

In fact, no one knows where the economy is heading, or what will happen to demand for building products.

BMF economist Thomas Lowe said: “Much depends on the effectiveness of the Bank of England’s strategy to bring down inflation. If we start to see signs of economic stabilisation, we expect the market to pick up in the latter months of this year and continue to slowly improve into 2024. We are, of course, keeping a watchful eye for any change in conditions that may affect the forecast for 2024.”

Source: BMF