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A forecast for the countertops industry for 2016 and beyond By Kevin Cole, Editor Forecasting, regardless of the industry, is never a

Board have 2016 GDP pegged at a growth rate

interlocking parts that affect each other and are

global, business membership and research

simple task. Our economy has many complex

difficult to align or predict. The general economy is subject to change based on a variety of

factors that can then change the outlook of the

from 2 to 2.7 percent. The Conference Board, a association, has 2016 GPD averaging above 2.3 percent. And the Wall Street Journal’s (WSJ) Economic Forecasting Survey released in

various market segments. However, examining

February, which compiles 60 economists’ opinions,

segment allows for the development of a

According to this same WSJ survey, the drops in

particular factors that most affect the countertop relatively solid estimation of how that segment will fair in 2016 and beyond.

has 2016 GDP growing an average of 2.3 percent. the unemployment rate (last year from 5.6 to 5

percent) will continue into 2016 but at a slower

If one were to just “ask around,” certainly the

pace, finally breaking the 5 percent mark (which

for the countertop industry in most cases.

ending the year at 4.7 percent. The Fed

available data must be performed and the

the labor market along with increased consumer

beginning with the general economy and

weaker global economy.

word on the street is that things are going well

traditionally represents full employment) and

However, to get a true estimation, a study of the

concurred, predicting continued improvement in

opinions of the experts must be factored in,

spending will fuel growth, even in the face of a

factoring down through related markets to the

In the words of the latest Construction Outlook

most specific information. Doing so will validate confidence that 2016 will be another solid year

for the countertop industry. Of course, conditions are subject to local and regional factors that are

difficult to take into account when looking at the broad view, as is found here, so there will obviously be some variance. The General Economy Looking at 2015, there were peaks and valleys, but overall it continued in the correct direction economically. According to Congressional

Budget Office (CBO) statistics, the average

increase in GDP in 2015 was about 2 percent.

The harsh winter going into 2015 initially stifled

growth (0.6 percent in Q1 2015), but there was a strong bounce-back in Q2 with a GDP growth

rate of 3.9, before leveling off in Q3 at 2 percent. Experts believe the GDP will continue to grow in

2016, with the CBO predicting an average rate of more than 2.7 percent. Likewise, the latest

economic projections of the Federal Reserve 30 • Vol. 9 / Issue 1 • International Surface Fabricators Association

by FMI, a construction industry consulting and

investment banking services company, “Federal Reserve Board Chair Janet Yellen announced that the Fed would raise the funds rate from

near zero to 0.25 to 0.50 percent after seven years of low, recession-fighting rates … the long-expected move is a strong signal of

confidence in the U.S. economy to continue to create jobs and improve wages.” Housing The decorative surfacing industry is closely tied to the housing market, and it showed strong growth once again in 2015.

While still below peak levels in 2006 during the housing bubble, in 2014 housing starts finally

broke 1 million again. And 2015 saw growth of

more than 10 percent, finishing at an estimated 1,111,200 (see Figure 1). While single-family homes are still less than half the level of the

housing peak, multifamily dwellings are now more than 15 percent above 2006 levels. And once

Figure 1 again, by far, the strongest residential building trends are in the South. The National Association of Home Builders’ (NAHB) Housing and Interest Rate Forecast updated at the end of January predicts housing starts will rise more than 10 percent again this year ending at 1.25 million and at 1.52 million in 2017. Once again looking at the WSJ’s economist survey, the numbers jibe, with the prediction of new home starts at 1.27 million in 2016. And going one step further, it predicts home prices will increase by 4.5 percent on average. While this is a slightly slower rate than 2015, it is still a very positive sign. Figures presented by the National Association of Realtors (NAR) also predict a similar increase in housing starts. Plus NAR numbers showed existing home sales up more than 6 percent in 2015 and predicts continued increases in 2016, albeit by less than 2 percent overall. All in all, the indicators show that housing has significantly stabilized, and subsequent predictions point to continued growth, which should contribute to the well-being of the surfacing industry. Nonresidential Construction When it comes to nonresidential construction, the outlook also seems positive. FMI predicted in its Construction Outlook Report that the five major nonresidential construction segments historically tied to surfacing (lodging, office, commercial,