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Builder And Construction Suppliers Show Strong Performance

Builder and construction suppliers are set to grow in 2024 according to a new report from inventory software company Unleashed.

The quarterly Manufacturers’ Health Index showed that small and medium sized companies scored 82 out of 100 in the detailed index.

It is calculated across a series of metrics that include purchasing, and internal efficiencies that impact stocking levels and lead times across 16 manufacturing categories.

Unleashed said a score of 50 points or more indicates that a sector is performing well against these metrics. 

Jarrod Adam, Head of Product at Unleashed, said that all manufacturers had faced challenges 2023 including rising inflation and high borrowing costs.

“The UK is home to over 98,000 construction companies, many of which are SMEs that make a critical contribution to both the industry and the UK economy,” he explained. “It’s clear from our index that firms have recovered well from the supply chain disruption – and high cost of materials – seen during the pandemic and its aftermath.

The tough economic climate doesn’t appear to have dampened homeowners’ appetite for renovations because they recognise the long-term value they can have. 

“Our index also shows that lead times have dropped for building and construction, down to 17 days – below the national average of 20.”

Adam said that while the outlook for 2024 did contain challenges despite the favourable outlook.

“However, the industry is facing high overstock levels at £364,502 – the highest of any industry, and well over double the average level of £141,397. This reflects the slowdown in bigger house building projects due to high borrowing costs and economic uncertainty.

“While the building and construction sector work to overcome costs and reduce their overstock levels, our analysis suggests that they are in a strong position to meet this demand because they have finely-tuned their inventory management processes.

“Of course, any improvements they make would put them on an even stronger footing in this highly-competitive and fast-moving sector.”

The UK manufacturing industry rebounded at the end of 2023, with 11 of the 16 categories studied scoring more than 50 health points in the Manufacturers’ Health Index – contributing to the average of 77. 

Leading the index were cosmetics and personal care, and industrial machinery, raw material and equipment, which both achieved a near-perfect score of 98.

Office equipment and supplies was bottom of the table at just 18 points, followed by food at 30 and electronics and communication at 38.

Lead times have also more than halved from the 43 day average of 2022 to 20 at the end of 2023.

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