The year ended on a positive note with sales of Trade Paint being up for the 3rd consecutive month and by 1.3% compared to December 2021. Still, despite a buoyant Q4, the total volumes for the year finished 2.5% below 2021 and 2.7% below 2019 as would be expected following this years’ challenging economic climate.

The second half of 2022 witnessed a quick contraction of the retail channel, where at full year 2022, total paint volume of 140.3 ML declined -12% versus 2021, and -22.5% from the Covid-19 induced 2020 peak of 181 ML. The garden woodcare market is a similar story: 35.2 ML sold in 2022 is a -26.5% decline on 2021, and a -41% fall compared to 2020.

All sectors decreased for the year as a whole in the Trade channel, with direct sales -2.3% lower than in 2021. Independent decorators’ merchants fell -1.5% while sales to builders merchants declined -1.0%. However, compared to 2019, builders merchants fell -16%, down more than all other sectors.

The latest ONS Construction Output statistics estimated no volume growth in December 2022, following a 0.4% increase in November. The main positive contributors to December’s numbers came from infrastructure new work and non-housing repair and maintenance, which increased 3.7% and 5.4%, respectively. The main negative contributors were private new housing and private housing repair and maintenance, falling -2.3% and -8.5%, respectively.

There is still a lot of uncertainty about 2023 but everything points to construction output decreasing as investment in new projects slows down and in some cases halts due to increased interest rates, now standing at 4%. Interest rates increase the cost of construction materials, reduce the profits of construction companies as borrowing is more expensive, and reduce housing demand as mortgages becomes expensive.

In terms of the housing market, as house prices fell for the fifth month in a row in January, demand for mortgages tumbled to its lowest level since the December 2020 covid lockdown. House buyers are struggling with affordability, so we may see Housing RMI cool down even further. Since new and RMI Housing is the biggest volume contributor to construction output, this will most likely have a negative effect on the Trade Paints market in 2023.