Quarter two 2022 followed the same strong pattern as quarter one. Strong in the sense of steady daily sales as compared to the madness of 2021. While demand is on par with the prior year, it is inevitable when there are price increases that merchants stock up, possibly skewing actual market performance. The first couple of weeks of quarter three certainly suggest that to be the case, or perhaps everyone has gone on holiday.

It seems every two to three years we have Prime Ministerial elections, only this year we also have to contend with rising inflation, strong demand for new houses, higher house prices, increasing mortgage and interest rates, and a shortage of labour and materials. Add in the impact of the war in Ukraine and the reliance of Europe on Russian gas, and there could be further ramifications for our industry.

That said, demand from the construction sector remains relatively good, particularly from the new build sector. House builders continue to report soaring forward sales, even at higher house prices. Labour shortages challenges though will have an impact on the speed of build and will curtail growth. At some point in the current economic cycle, there must be serious concern that weak consumer confidence will reduce the demand for new housing.

Even with the disruption of the war, steel availability, albeit at significantly higher prices, is back to more normal supply, and the extended lead times are expected to reduce late 2022 to early 2023. Foolishly, I forecast steel challenges would ease at the end of 2021 to the start of 2022, but then Putin invaded Ukraine, and that did not pan out.

The new building regulations coming into force requiring CO2 emissions of new homes to be 31% lower than previously will drive a more technical sale for merchants, particularly around the specification of Hi-therm lintels to satisfy the fabric first approach.