International Door & Operator Industry

SEP-OCT 2013

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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MAnAGeMEnT GaraGe Door activity inDex Just Maybe, Construction is Recovering by John Zoller & David Bowen, Zoller Consulting, Inc. Finally, housing and construction activity is headed in the right direction, and the pace is accelerating. Nothing spurs the overall economy quite like resurgent home building. A strong housing market will ripple through the U.S. economy and drive the demand for construction materials (including garage doors), while creating jobs and bolstering consumer confdence. This expansion will likely not take place seamlessly. There will be month to month slow-downs, followed by much publicized increases, and there will be the constant undercurrent of politically motivated complaining about banks, defcit spending and the economy in general. Never the less, there is mounting hard evidence to suggest that consumers are spending, business is investing and builders are building, and long awaited real economic growth is occurring. 68.7% of the total. Although durable goods account for only 11.0% of PCE (the other being nondurable goods and services), such purchases create jobs and represent confdence in the economy. Perhaps the most encouraging of the various recent industry reports was from the National Association of Homebuilders, which noted that homebuilder confdence rose in July 2013 to its strongest level in 7-1/2 years as tightening supply and solid demand even in the face of rising mortgage rates fueled the sector's recovery. U.S. Census Department data now suggests that upwards of 962,000 new housing units could be built during 2013, and it is clear that spending for home repair, renovation and remodeling is growing by double digits on an annualized basis. The National Association of Realtors noted in May 2013, that sales of previously owned homes rose 4.2% to 5.2 million, the highest level since 2009. Standard & Poor's Case-Shiller index, which measures changes in housing prices, showed that existing-home prices in 20 U.S. metropolitan areas were 12.1% higher in April than a year earlier. Moreover, prices posted their largest monthly gain since the Case-Shiller data was initiated, rising 2.5% in April from March in the 20-city index. There are many other economic indicators to consider, but two more are of particular interest: First, for the frst time in several years, the growth rate than a third of sales, outpaced the growth rate of its consumer segment, according to Chief Financial Offcer Carol Tomé, in an interview with the Wall Street Journal.2 This is particularly strong evidence of the housing recovery, Ms. Tomé said. A second important indicator is the reduction of the number of "underwater" mortgages. The percentage of all residential mortgages that are in negative Continued on page 30 Index Value Recently, Lynn Franco, Director of Economic Indicators at The Conference Board, said, "Consumer Confidence The IDA Garage Door Activity Index increased for the third 175.0 consecutive month and is now at its highest level Consumer confidence is prompting more Annual home improvement and more new since January 2008 (Index Residential residential construction ... but some VPIP peaks at 150.0 institutional and commercial sectors are 87.3). Consumers are $619.8 billion stagnent with public funding in short supply considerably more positive 132.5 126.7 about current business and 137.8 121.5 125.0 128.8 labor market conditions 122.7 111.8 108.8 119.4 than they were at the Base Year 104.5 112.5 = 2003 beginning of the year." 107.3 100.0 104.6 1 NonNothing drives economic 100.0 Residential 94.1 growth more so that Construction VPIP peaks at 2013 growth is finally consumption of cars, travel, 75.0 $709.8 billion accelerating as durables and, of course, employment strengthens home improvements. 58.9 Consumer spending (or 2010 & 2011 revised as 50.0 GDP reflects less rapid "personal consumption recovery than originally expenditures" or "PCE" believed in economist jargon), is 25.0 the largest component of Gross Domestic Product Designed, calculated and maintained for IDA by Zoller Consulting, Inc. Copyrighted material. May not be reproduced in whole or part without express written permission of the International Door Association (GDP), accounting for 1 2 June 2013 Consumer Confdence Survey® The Conference Board Home Depot Earnings: Housing Recovery Boosts Proft, Wall Street Journal, May 21, 2013 29

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