ASA member sales up 6.4% from last year
The industry outlook seems to be holding strong as sales for members of the American Supply Association were up 6.4% Y/Y in the third quarter of 2019, according to the organization’s monthly report, ASA Advisor.
Year-to-date through September, sales across the PHCP/PVF industry were up 4.8% on average and up 6% for the trailing 12 months prior. The next quarterly update will be available in January.
“Dec. 1 marks China’s consumer product tariff deadline and is an important date to watch,” ASA Business Intelligence Analyst Ayesha Salman said. “Purchasing managers may try to get ahead of this deadline — which could create a surge in product demand. It may also lead to an overstock of inventory.”
Looking forward over the next 36 months, the ASA sales forecast continues to be bullish, but just as with most economic outlooks, there is a slight recession risk on the horizon.
As mentioned in prior months’ reports, the soft period would likely be timed with the 2020 presidential election (during the lead-up in Q2/Q3 of 2020). Typically, in presidential elections, private investment and spending slows during that time, and likely would provide the impetus for an economic slowdown.
In Q2 and Q3 of 2019, investment and spending has slowed as mentioned earlier in the briefing. Many additional factors would be involved in a recession, affecting the depth and longevity of a downturn, ASA noted.
“U.S. gross domestic product for Q3 will be released in the next few weeks and the expectation is that it will be one of the weakest readings all year,” said Dr. Chris Kuehl, ASA’s economic analyst. “The estimate has been between 1.5% and 1.8%, and that will drag the annual rate down to roughly 2%. Most of the damage seems to be attributed to the trade wars, but there have also been factors such as the chronic labor shortage holding back growth.”
Also of note, the report shows that housing starts have improved dramatically across the board with higher-end homes and starter homes, but that pace has slowed. The major differences are still in specific markets with very rapid growth vs. very slow growth in some of the older urban cores, ASA reported. On the other hand, builders also are struggling to find labor enough to start more homes.