The Builders Merchants Federation (BMF) has downgraded its 2026 outlook for the construction supply chain, forecasting a contraction of 1.8% after previously expecting growth of 2.3%.
The revised forecast, published in the BMF Industry Forecast Summer 2026, reflects growing concerns over geopolitical uncertainty, subdued consumer confidence, rising inflation and weaker demand for building materials across key construction markets.
The downgrade comes as the sector continues to grapple with delayed project starts, sluggish housebuilding activity and softer spending on home improvements.
Housing and home improvement markets remain under pressure
According to the BMF, ongoing economic uncertainty is weighing heavily on demand for building materials, with persistent concerns over household finances and inflation continuing to affect both the housing market and repair, maintenance and improvement (RMI) activity.
The trade body said the building materials supply chain faces a more cautious trading environment, with several key sectors struggling to regain momentum.
John Newcomb, Chief Executive of the BMF, said: “Weaker workloads, delayed project starts and ongoing concerns about future demand have created a challenging trading environment for the building materials sector.
“Persistent concerns about household finances, inflationary pressures and the wider economic outlook continue to constrain housing market activity and home improvement spending.”
Regional construction markets face different challenges
The BMF noted that market conditions vary across the UK, with some regions proving more resilient than others depending on the balance of construction activity.
Areas with greater exposure to residential and commercial development have experienced more difficult trading conditions, while regions benefiting from infrastructure investment and maintenance work have generally performed more strongly.
Newcomb said: “Markets such as London, with greater exposure to housing and commercial development, have generally faced the most difficult conditions, while others have demonstrated greater resilience through a stronger mix of infrastructure, maintenance and repair activity.”
Building materials sector faces difficult trading conditions
The BMF provides quarterly forecasts for its members and publishes the Builders Merchants Building Index (BMBI), which tracks monthly building materials sales and is widely used as an indicator of activity across the construction supply chain.
Representing more than 1,020 member businesses, the federation’s membership accounts for combined annual sales of £52 billion and employs almost 209,000 people.
The organisation said elevated levels of business distress and insolvencies continue to create challenges across the construction sector.
Newcomb added: “Construction remains one of the most vulnerable areas of the economy, with elevated levels of business distress and insolvencies highlighting the challenges facing many firms.
“Recent activity indicators point to an industry that continues to struggle to gain momentum, with sluggish demand across several key product categories, particularly those linked to new housing activity where the rising cost of materials is outpacing UK inflation.”
BMF forecasts recovery for 2027
Despite the weaker short-term outlook, the BMF expects conditions to improve gradually as economic pressures ease and construction activity recovers.
While acknowledging that trading conditions are likely to remain difficult in the near term, the federation is forecasting potential growth of 1.7% in 2027.
Newcomb concluded: “Trading conditions are expected to be difficult in the short term, but optimism for a gradual recovery remains, with potential growth of +1.7% anticipated for 2027.”
