Aktrin projects slower growth in Canada
Furniture spending expected to rise 2.4% this year
Michael J. Knell -- Furniture Today, June 1, 2007
OAKVILLE, Ontario — Canadian consumer spending on furniture will moderate this year, slowing its growth in response to declining consumer confidence, weaker income growth and a retrenching housing market, according to the Aktrin Furniture Information Centre, a private industry think tank here.
Even though the Canadian economy is outperforming that of the United States, Aktrin President Stefan Wille believes its annual growth rate will decline from the 2.8% seen in 2005 and 2006 to 2.4% this year. Personal income growth also will slow, he said.
“Growth of real disposable income in 2006 was 4.8%,” Wille said in the latest edition of Furniture Economics. “Growth will be much slower this year and is estimated to be only 2.9% and this in spite of the promised income tax cuts by the new government.”
While the Canadian residential housing market continued growing in 2006, Wille said that on a value basis housing starts only advanced 2.4% after expanding at rates of 3.2% in 2005 and 7.8% in 2004.
“However, the market is now saturated now and demand is waning,” he said. “We predict a negative growth rate of 1.7% this year. If mortgage rates continue to climb, it may even fall further. In unit terms, this represents a drop from 228,000 (housing starts) in 2006 to 205,000 this year.”
Consumer spending on all goods and services is likely to contract from the 4% growth rates in each of the past two years. “Due to the slowing economy, we anticipate a growth rate of 3.1% in 2007 and less than 3% in 2008,” Wille said.
Expenditures for durable consumer goods — including furniture and other big ticket home goods — grew at a healthy rate of 6.8%, on top of 5.5% growth in 2005. “However, as consumer confidence is declining, we expect durable consumer good sales to advance by only 4.3% this year and possibly still lower next year,” Wille said.
Measured at retail prices, Wille said the Canadian furniture market grew 8.9% in 2006, continuing a growth trend that started during the third quarter of 2002.
“For 2007, we predict a noticeable slowdown to a rate slightly below 3%,” he said. “The size of the Canadian furniture market in 2006 stood at C$11 billion (evaluated at retail prices and including sales taxes that average 14% nationally) and if our growth predictions are correct, the market valuation will reach approximately C$11.4 billion this year.”
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Aktrin: Canadian furniture sales to slow in '07
Jul 29, 2007
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