While 2016 began with some concerns about the economy, our exclusive tED magazine/Baird research is showing a significant shift in just the last few weeks.
Baird received responses from 175 members companies of NAED, reporting, “sentiment among the national distributors has turned more positive in recent weeks, driven by ‘less bad’ results YTD. We believe improved optics can be in part attributed to a mild winter.”
The companies that responded to the tED magazine/Baird research also say revenue growth is expected to be at a higher level than first expected for the second quarter of 2016. Electrical revenue should be up 3.1%, while datacomm is expected to see a modest 1.9% revenue increase over the next three months.
Also, the responses show sustained construction growth on the commercial side, with some members saying, “commercial construction looks positive for 2016”, “Increased opportunity on design/build construction projects as well as LED lighting retrofit”, and “not a lot of jobs quoting in the first quarter. Second half of the year looks more promising.”
There is some pessimism, though. The industrial side may slow down some of the potential, with our respondents saying, “we expect the industrial economy to bottom out in 2Q and then begin improving in 3Q-4Q”, “industrial slowdown more apparent”, and “while the reality is that construction markets are pretty good, institutional and industrial are still a drag.”
The current trends also show pricing was flat in the first quarter of 2016, and as long as there is a drop in copper prices, that looks to remain for the second quarter. Competitive pricing pressures remain high overall. One distributor described the pricing pressure by saying, “visibility of pricing online has made every purchase a bid scenario. Distributors feel the need to respond to lowest published price in order to get an opportunity to quote.”
Look for a complete report on the exclusive economic forecast by tED magazine and Baird Research in an upcoming issue of tED magazine.
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