Michael J. Knell
OAKVILLE, Ontario — Slippages in housing starts, consumer spending and consumer confidence are likely to moderate growth for Canadian furniture retailers this year and next, according to the latest forecast from research company Aktrin Furniture Information Center here.

In its newsletter, Furniture Economics, Aktrin President Stefan Wille said the Canadian economy expanded 2.9% last year, and forecast that its performance in 2013 and 2014 would be slightly slower.

Canadian consumer spending rose 4% in 2012. “Due to rising interest rates, we anticipate a slower rate of about 3.1% for 2013,” Wille said.

While expenditures for durable consumer goods, including furniture, were even more buoyant last year, growing 6%, up from a 3.1% growth rate in 2004, consumer confidence is declining again. “If interest rates continue to climb, we expect durable consumer good sales to advance by only 3.4% this year,” he said.

The Canadian economy’s solid performance over the past couple of years has helped boost furniture sales, Wille said, which advanced steadily between the third quarter of 2002 and the first quarter of 2012.

“Growth during the remainder of last year was flat,” he said. “However, indications are that growth will resume again this year, albeit at a slower pace than during the past few years, and we predict an average growth rate of 5.3%.

Including sales taxes, which average 15% across the country, the size of the Canadian furniture market in 2012 stood at C$10.1 billion. “If our growth predictions are correct, the market valuation will reach C$10.7 billion this year,” Wille said.

Aktrin expects personal income to advance a healthy 4.9% in 2013 and 2014, about the same pace as in 2012. But factoring in inflation and taxes means real disposable income grew only 2.4% in 2012. That could improve slightly in 2013, Wille said, particularly if the new government cuts taxes.     
       
While the Canadian residential housing market remained healthy in 2012, its growth rate of 3.3% was down from 2004’s 8.3%. “The market is saturated now and demand is waning,” Wille said. “We predict a growth rate of only 2.5% in 2013. It may be even lower in 2014 if mortgage rates continue to climb.”