Electrical Distributors Forecast Solid Sales Growth for 2024 in EW Survey

In the 40-plus years Electrical Wholesaling has published an electrical  industry sales forecast in its Annual Market Planning Guide, the electrical distributors who answered the survey for this award-winning benchmark research have proven to be an optimistic lot who in most years with an intuitive feel for the pulse of the industry.
Their estimates for growth usually come in at between +4% to +8% industry growth. For 2024, the forecast from the 100-plus distributors who provided an estimate for their company’s change in revenues came in at +9.7%, as it was past the high end of the industry’s typical sales increase, and on the heels of a +8.9% forecast for 2023 and a +12% forecast for 2022.
Those  numbers all sounded high to Electrical Wholesaling’s editors, and while we historically haven’t considered inflation in our calculations, we decided to make an allowance for inflation over past three years because of what the U.S. economy has been through in the COVID and post-COVID era. We made the modifications in the forecasts using the Federal Reserve’s forecast of 2.8% inflation for 2024, and the 3.3% for 2023 and 8% for 2022 in the historical annual inflation data at www.macrotrends.net. We also considered another factor on the inflation front — the annual change in the U.S. Bureau Labor Statistics’ Producer Price Index, which has averaged +2.6% since 1991. It tracks pricing of key products used in industrial production, including about two dozen electrical products.
When you adjust the sales growth expectations since 2022 for inflation, Electrical Wholesaling’s estimates for total sales of electrical products through electrical distributors climb from $135.7 billion in 2022 (+4% adjusted for inflation) to $137.5 billion in 2023(+1.3% adjusted for inflation); and $146.8 billion in 2024 (+6.8% adjusted for inflation).
Even with these adjustments, distributors are still more bullish than several other widely respected economic forecasters. Chris Sokoll, president, DISC Corp., sees electrical market sales declining -1.6% in 2024 from $137.4 billion to $135.2 billion. The Consensus Construction forecast published by the American Institute of Architects, which blends to forecasts of nine construction economists, expects the key nonresidential construction category to only grow +2% in 2024. On the macroeconomic level, the Conference Board is calling for +0.8% growth in real GDP (Gross Domestic Product) while Goldman Sachs published an economic forecast earlier this month calling for +2.1% full-year GDP growth.
Respondents to the Electrical Wholesaling survey are also  planning on making key capital expenditures in 2024. Close to 40% of respondents said they would be purchasing new delivery trucks, material handling equipment, tablets and smartphones, while 13 of the 114 respondents said they would be investing in an ERP system.