Builders’ merchants’ weak Q4: demand signals and 2026 outlook for project teams
Reviewed by Tom Sullivan
First reported on The Construction Index
30 Second Briefing
Builders’ merchants ended 2025 with Q4 takings down 1.2% and volumes down 2.9% year-on-year, while prices were 1.8% higher, and December’s like-for-like volumes fell 5.8% despite a 3.6% price rise. Average daily takings in Q4 were 9.0% lower than Q3 and daily volumes 13.1% lower, mirroring ONS data showing a 2.1% quarter-on-quarter fall in construction output, led by a 3.6% drop in private new housing. The CPA has cut its 2026 construction output forecast from +2.8% to +1.7%, with private housing RMI now expected to contract by 1.0%.
Technical Brief
- Q4 2025 had four fewer trading days than Q3, driving total takings down 14.6%.
- The same Q3–Q4 shift saw total volumes fall 18.5%, indicating sharper pull-back in physical throughput.
- Q4 2025 prices were 4.8% higher than Q3, suggesting continued input-cost pressure despite weaker demand.
- December 2025 included one extra trading day year-on-year, lifting unadjusted takings by 3.3% despite softer volumes.
- On that unadjusted December basis, volumes still slipped 0.3% while prices rose 3.6% versus December 2024.
- Month-on-month, December average daily takings dropped 18.2% and daily volumes 20.6% compared with November.
- With two fewer trading days than November, December’s total takings fell 26.3% and volumes 28.5%.
- Across full-year 2025, one fewer trading day meant average daily takings rose 0.9% and volumes 1.9%.
- Full-year 2025 average prices eased 1.0%, implying some deflation in core building product categories.
Our Take
With UK private new housing output falling and the Construction Products Association cutting its 2026 growth forecast, merchants exposed to heavy-side products for new build are likely to see tighter margins than those focused on repair, maintenance and improvement (RMI) work, even though RMI is also now forecast slightly negative.
The combination of easing builders’ merchant prices (down around 1% year-on-year) and CPI still above the Bank of England’s 2% target suggests further real price compression for core materials, which typically pressures smaller independents more than national chains in our infrastructure coverage.
Youth unemployment at 16.1% in the United Kingdom points to a looser entry-level labour market, which may help merchants and contractors fill junior roles, but it also signals weaker household formation and first-time buyer demand that could weigh on private housebuilding volumes into 2026.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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