Sunday, January 23, 2011

Catalina Outlook and Trends for 2011 Floor Covering Industry

FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK

A year ago the US  floor coverings manufacturers, distributors, retailers and marketers were on their way to the Surfaces flooring show and gearing up for a recovery in the US economy with housing demand stimulated by the home buying tax credit. So what has happened since? And what is the expected trend for 2011? Below is a quick recap of 2010 and my thoughts on trends for 2011 -  as we gather again at Surfaces for the start of another year in the floor covering industry.

In the first half of 2010, US housing demand increased at double-digit rates but when the tax credit expired the housing market took a double-dip downward.  US economic growth also slowed in the middle of the year with consumer spending turning tentative as concerns about government tax and debt levels grew.

US floor covering manufacturer sales increased as high as 4.3 percent in the second quarter of 2010 but slowed in the third and fourth quarters with the final total sales gain estimated at 1.8 percent in square feet.  However, the gain just ended up refilling distribution channel inventories, since final demand continued to decline.

My thoughts on 2011:

Based on some recent economic indicators that have become more positive in recent months Catalina anticipates that US floor covering sales will rise another 2 percent in square feet this year, reflecting an increase in demand as installers as homeowners and renters begin to increase their floor coverings spending.

This outlook is based on economic indicators:

Personal income, on a seasonally adjusted annual basis, increased by 3.8 percent in November 2010 over November 2009.  This is up from a 2.9 percent year-to-year increase from January to October.
Total employment was up by 1.2 million in December 2010 from December 2009.  The change in employment over the first 11 months of 2010 averaged minus 997,000.  Employment gains have been positive since September 2010.
•  Existing home sales was about 5.3 million on a seasonally adjusted annual basis in December 2010.  This compares to a monthly average of 4.9 million sales over the previous 11 months.  The monthly supply of unsold existing homes has also hit its lowest rate since March 2010.  This indicates that the double-dip in the housing market could be coming to an end.
•  Sales growth of building material retailers, including home centers, is strengthening along with the gains in income, employment, and existing home sales.  Sales of building material retailers are estimated to have risen by 7. percent in the fourth quarter of 2010.  This compares to flat sales over the first three quarters of 2010.
Along with these positive economic indicators, government economic stimulus is being expanded with additional quantitative easing by the Federal Reserve and tax cuts passed by Congress.  All these trends will lead to stronger floor coverings demand, especially in the second half of the year.  Floor coverings manufacture square foot sales could be up in the 2 to 3 percent range by the second half of 2011.

What steps are you taking now to take full advantage of the 2011 recovery? Recovery 2.0?

I’ll be at Surfaces this week along with others from the Floor Covering Institute who post regularly here: Jim Gould, Christine Whittemore, Mitch Dancik, Susan Negley, Dontato Pompo, Chris Ramey, and Lew Migliore. Let's keep a conversation going. You can write a comment here, send us a tweet on Twitter @FloorcoveringIn or email us at info@floorcoveringinstitute.com.

Stuart

Stuart Hirschhorn is a member of the Floor Covering Institute and Director of Research of Catalina Research, Inc. which provides in-depth market research on the floor covering industry.


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