The distribution category that saw the most consolidation in 2015 – building materials & facilities maintenance – is projected to deliver the biggest revenue growth this year, according to the latest MDM-Baird Distribution Survey, Declining Demand Drives Down 4Q.
Rampant M&A activity coupled with a positive revenue forecast is expected to provide a lucrative opportunity for companies looking to tap into residential and nonresidential construction end markets, both of which are poised for solid years.
According to the most recent MDM-Baird survey, the building materials & facilities maintenance category produced the top two sectors for revenue growth in the fourth quarter, with MRO – non-industrial at 3.8 percent and building materials & lumber at 3 percent.
The category, which also includes pool & spa, roofing and HVAC, combined for 1.5 percent revenue growth in the quarter, but survey respondents in this category expect to do well in first quarter with 3.2 percent revenue growth and 2016 with 4.2 percent.
A related category – electrical & datacomm – notched the highest growth in the fourth quarter at 1.9 percent – flat sequentially but still tops among the five categories thanks to solid nonresidential construction that is "expected to continue into 2016." The category is forecasted to post 3.9 percent revenue growth in 2016, behind only building products.
The latest news bolsters earlier 2016 projections. According to December's new residential construction report, privately owned housing starts in December were at a seasonally adjusted annual rate of 1,149,000, up 6.4 percent from same month a year ago.
Read more about which sectors should do well in 2016 in the latest MDM-Baird Distribution Survey, Declining Demand Drives Down 4Q.