Catalina: Recovery driven by contract

U.S. floor coverings sales (defined as supply, calculated as shipments minus exports plus imports) continue to recover at long·term industry growth rates despite relatively sluggish domestic economic growth, Catalina Research reported. Floor coverings sales are benefiting from sharp gains in private nonresidential construction spending and steady gains in U.S. housing demand. Therefore, according to Catalina Research, sales are being driven by commercial sales and builder purchases.

Dollar floor coverings sales are estimated to have increased by 5 percent in the first half of 2015, while square foot sales could have risen by 3.4 percent.

These increases were led by gains in commercial markets. Commercial market sales are estimated to have increased by 7.5 percent to 8 percent in dollars in the first half. The increase is due to an almost 20 percent increase in private nonresidential construction spending over this period. Commercial market sales, however, continue to be adversely affected by weak public building construction spending.

The builder market continues to outpace overall floor coverings sales trends d espite a slowdown in housing starts. Builder dollar floor coverings purchases are estimated to have increased by 5.5 percent in the first half of 2015. This is in line with housing starts.

The residential replacement market continues to grow closer to 2.5 percent to 3 percent in dollars. The residential replacement market, which accounts for more than half of total floor coverings sales, has been hurt by the decline in existing home sales in 2014.

The sluggishness in the residential replacement market has weighed on carpet and area rugs’ share of to tal floor coverings sales since some 65 percent of total soft surface flooring sales are made to this end-use market. This resulted in carpet and area rugs dropping to an estimated 49.2 percent of total floor coverings dollar sales in the second quarter of 2015, and 55.8 percent of total square foot sales.

Meanwhile, hard surface flooring continues to make inroads in the U.S. floor coverings market. Hard surface flooring dollar sales are estimated to have increased by 6.2 percent in the fir st half of 2015 and square foot sales could have risen by 4.6 percent. In the soft surface secto r, the increases could have been 3.7 percent and 2.5 percent, respectively.

U.S. floor coverings sales gains could strengthen somewhat in the second half of 20 l 5 since nonresidentia1 building construction spending remains strong. Demand may also increase from builders since current inventories are low, permits are beginning to strengthen and larger single-family homes could increase in importance. Consumer floor coverings spending may also begin to increase due to the upturn in existing home sales in 2015.

FCW – Floor Covering Weekly, July 6, 2015

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