Construction Industry Growth Signals Recovery
Following a slowdown in construction projects through June, as companies waited for the results of the general election, July showed a strong increase in new orders and activity. A survey by S&P Global, calculated that their purchasing manager’s index (PMI) score had grown from 52.2 in June to 55.3 in July, any score over 50 represents growth in the sector and was previously 49.7 back in February this year.
The report, based on 150 leading companies in construction, showed there had been growth in all three sectors – housing, commercial buildings and civil engineering. As paused projects were released this was the strongest growth since 2022.
Builders Merchants sales are obviously lagging behind the market as the BMF weekly bulletin (13th September) reported a dip in their outputs for July of 0.4%, mostly affected by a fall in new private commercial work and private housing repairs and maintenance which fell 2.4% and 1.7% respectively. However, for the three months May-July there has been an overall increase of 1.2%.
A potential increase in private spending on home improvements and repairs, driven by a possible future decrease in interest rates, could boost demand for construction materials. Combining this with the current growth in large-scale house building, commercial and civil projects, Builders merchants need to be ready to scale their operations accordingly.
How to succeed in a growing construction market
To succeed, builders' merchants and building product manufacturers must prioritise delivery efficiency and cost-effectiveness. With increasing construction volumes and rising costs optimising their deliveries is crucial. Investing in software and technology solutions that can help maximise profitability, reduce delivery costs by streamlining logistics operations, and provide better customer service, will not only safeguard their competitive edge but also ensure that builders' merchants and building product suppliers can meet the growing demand and build lasting relationships with their clients.
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