The US Market and what to expect in 2019
From Ceramic World Web – January 15, 2019 by Joseph Lundgren Consulting
With the US market being one of the most reliant on imports of ceramic tile in the world, many manufacturers deem it as the “land of opportunity”, however as you look at the indicators within the United States market it seems the economy may continue its upward growth cycle, but don’t be fooled by the numbers…
Except, if you look at the housing market its looks like 2019 will be a year of growth, but I do not believe we will see this due to two factors:
- Interest rates will continue to increase, as The Tax Cuts and Jobs Act -TCJA (aka Trump Tax Cut) delivered a short term injection to the economy.
- The individuals home owner’s deduction being cut to a maximum of $10,000 annually via the TCJA will begin to make an impact.
In addition, the Leading Indicator of Remodeling Activity (LIRA) provides a short-term outlook of national home improvement and repair spending to owner-occupied homes. This shows a nice growth in 2018, but then it tapers off in 2019, largely due to the decrease of existing home sales.
The impact of both new housing and remodeling beginning to decline will slow the market down. The residential market is approximately 60% to 65% of the market. The remaining portion being the commercial market which is made up of a variety of buildings including, but not limited to: office buildings, hotels, retail stores, shopping malls, universities and other buildings used for commercial purposes. While we see a strong commercial forecast via the Architectural Billings Index, which is an economic indicator for nonresidential construction activity, with a lead time of approximately 9–12 months, it is only 35%-40% of the ceramic tile market and forecasts for the next year.