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Heating, Air-conditioning and Refrigeration Distributors International announced average U.S. HVACR distributor sales declined 4.7 percent in September. The weakness is widespread, as evidenced in HARDI’s Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report.
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Difficult comparisons may account for double-digit sales declines in two of the regions, but two of the seven regions experienced high single-digit declines, and two of the other regions were about flat year-to-year. The West was the sole positive region with respectable mid-single digit growth.
September’s distributor performance is similar to what HARDI’s economist Andrew Duguay has been observing from consumers and business. “Over the past few months, there was a notable hesitation to make large-dollar investments. Businesses may be holding off on purchases in order to write them off next year in the case of higher tax rates or simply waiting to decipher the economic and political climate post-election. Consumers, uncertain of what their disposable income may be in 2013, appear to be stalling and weighing their options,” Duguay said.
HARDI Market Research and Benchmarking Analyst Brian Loftus indicated the report hinted that the subdued market conditions may continue. “Inventories are increasing in all regions and revenues per employee clearly peaked early in the summer,” Loftus said.
Days Sales Outstanding, a measure of how quickly customers pay their bills, held steady in the high 40s, where it has been throughout the year, compared with 50 days last year.
“Our most reliable, leading indicators are not suggesting a recession in the macro economy,” Duguay said. “So the negative numbers we are seeing today are more likely short-term hesitation among businesses and consumers, rather than a systemic long-term trend toward recession.”