Aktrin sees continued growth in spending
By Furniture Today Staff -- Furniture Today, June 2, 2003
Oakville, Ontario — Canadian consumer spending on household furniture should see its fourth consecutive year of growth in 2003, spurred on by continued growth in housing starts, according to the Aktrin Furniture Information Centre, a private research group based here.
However, Aktrin President Stefan Wille believes climbing mortgage rates and an overstocked housing market will slow the rate of growth over the next 18 months.
"The Canadian residential housing market performed extremely well during the past few years," he said in the most recent edition of Furniture Economics, Aktrin's quarterly newsletter. "In value terms, it advanced by a staggering 16% last year after an advance of 4.7% in 2001."
But Wille fears that the residential housing market "is a bit oversupplied. To make matters worse, mortgage rates are starting to climb again. Therefore, it is a safe prediction that residential construction will grow at a much slower pace in the foreseeable future."
Aktrin forecasts Canadian housing starts will slow from 206,000 units in 2002 to 195,000 units this year, decelerating to 180,000 units in 2004.
On the positive side of the ledger, consumers should have a little more money to spend. Personal income grew an average of 2.5% in 2001 and 2002, after eliminating the impact of inflation and taxes.
"The rate may advance a bit this year and next but it will probably remain below the 3% mark," Wille said.
Canadian consumer spending on durable goods, such as furniture and bedding, outperformed the rest of the economy in 2001 and 2002 — spurred on by low interest rates.
"Growth last year stood at a healthy 6.4%, up from 4.5% in 2001," Wille said. "As interest rates are likely to increase later this year and since the accumulated pent-up demand is largely satisfied, spending on durable consumer goods will advance at a somewhat slower pace this year and next."
Including national sales taxes averaging 15%, Canadian consumers spent C$8.26 billion on furniture and bedding in 2002, up 8.2% from the C$7.57 billion spent in 2001.
"We anticipate a growth rate of 6.6% this year and approximately 5% in 2004," Wille said.
