US OFFICE FURNITURE MARKET OUTLOOK
by Stefan Wille

Severe rationalizations earlier this century showed positive effects in the American business sector. Pre-tax corporate profit growth reached 15% in 2003 and 2004, up from 7.1% in 2002. It is unlikely that double digit rates can be maintained. We predict a growth rate of 8.0% for pre-tax profit this year. Private investments also got out of the slump and progressed at a rate of 10.6% in 2004, compared to only 3.3% in 2003. For 2005, we expect continued brisk business investments with growth exceeding again the 10% mark, as long as interest rates rise only moderately.

Employment growth is not contributing much to office furniture demand. After timid growth of 1% in 2004, some improvement is expected this year, but the rate is not likely to exceed 1.6%. Non-residential construction spending ­ including office space ­ was frail during the past few years. It declined by -5.6% in 2003. Last year witnessed minor improvements (up 1.9.%) and this year may finally see healthier conditions with growth in the 4% range. In spite of lackluster construction, the current stock of office space could accommodate much more employment. 

Business outlays for office furniture (evaluated at manufacturers? prices and including RTA furniture) rose from $ 11.3 billion in 2003 to $ 11.8 billion in 2004. This represents an increase of almost 4.4%. Even though positive growth can now be detected, it is still shallow and does not reflects the overall pick-up in business investments. This year?s market valuation is likely to increase again, but will remain below the pre-recession peak of $ 16.4 billion in 2000.

Company Name: AKTRIN Wood Information Center
Website: http://furniture-info.com
Author: Stefan Wille
Address: 151 Randall Street
City: Oakville
State: ON
Zip: L6J 1P5