The electrical industry in 2007 is beginning to show the effects of the slowdown in the overall economy due to the contraction of the nationwide housing market and the credit shortage sparked by the collapse of the sub-prime lending market.
According to Electrical Wholesaling’s 2008 Market Planning Guide, electrical distributors expect total industry growth to slow down to in 2008 to 5.7 percent. That’s down from 5.8 percent in 2007 and significantly lower than the double-digit growth rates they forecast from 2004 to 2006. Electrical Wholesaling’s Market Planning Guide, to be published later this month, forecasts total sales through distributors of electrical supplies to hit approximately $94.2 billion in 2008, up from $89.1 billion in 2007. This total sales figure includes sales through full-line electrical distributors and sales through specialty distributors that focus on residential lighting fixtures, wire and cable, industrial controls, lamps, fuses and commercial/industrial lighting equipment.
With the Federal Reserve Bank forecasting inflation of less than 2 percent in the coming year, and growth forecasts for the overall economy in the range of 1.8 to 3 percent, electrical distributors’ aggregate expectations of sales growth of 5.7 percent may seem a bit optimistic, though some of the increase may come from rising materials costs.
At the time of last year’s study, distributors were expecting to see the industry grow 10.5 percent in 2007. With the benefit of hindsight — and distributors’ responses to this year’s survey — EW’s editors peg 2007 growth at approximately 5.8 percent.
The forecasts are based upon responses to Electrical Wholesaling’s annual Market Planning Guide (MPG) survey. Each year, the magazine asks more than 3,000 electrical wholesale firms for their previous year’s final sales results, sales estimates for the current year, and predictions for the following year. It also asks respondents how sales for the first six months of the current year compared with the first six months of the previous year. This year’s response rate was a solid 9.9 percent.