Industry
Outlook
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,