Columbus, Ohio - Heating, Air-conditioning and Refrigeration Distributors International (HARDI) released their monthly TRENDS report. The average sales growth for reporting HVACR distributor members increased by 4.4% in May 2014. The annualized growth through May is 5.6%.
May 2014 had one less billing day than the prior year, and the comparison was not easy. HARDI Market Research and Benchmarking analyst Brian Loftus said, “Four of our seven operating regions reported sales growth in the mid-teens or higher last May. Those same four reported sales about flat with the prior year. The 4.4% growth is close to the 6% organic growth for the US reported by Grainger for May.” The slow May results follow an even slower April, resulting in the annualized growth of 5.6% after 9 months in the 6% to 8% range.
The slightly subdued growth rates are part of a larger trend of easing Consumer Spending growth, as illustrated by the chart attached. Deflated Retail Sales, Excluding Automobile has reached a business cycle peak and the growth rate has slowed in recent months. We expect this trend to continue in the second half of the year as consumers adjust their spending habits according to slightly higher inflation rates and still-mild wage growth. This is not alarming territory for distributors at this point and we expect a soft-landing (non-recession) for most pieces of the economy in 2015.
“The slightly subdued growth rates are part of a larger trend of easing Consumer Spending growth,” said HARDI Senior Economist Andrew Duguay. “We expect this trend to continue in the second half of the year as consumers adjust their spending habits according to slightly higher inflation rates and still-mild wage growth.”
The Days Sales Outstanding, a measure of how quickly customers pay their bills declined from the April level. If DSO continues to decline, this would be the third consecutive month when the annual peak occurred in April.
HARDI members do not receive financial compensation in exchange for their monthly sales data and can discontinue their participation without prior notice or penalty. Participation is voluntary, and the depth of market coverage varies from region to region. An independent entity collects and compiles the data that can include products not directly associated with the HVACR industry.