Furniture Canada

Furniture Canada

Canadian Office Furniture Market and Forecasts
By Stefan Wille - Ezinearticles

Corporate earnings are a significant driving force for office furniture consumption. Canadian business profits (pre-tax) rose by a healthy 11.9% in 2005. Unfortunately, the growth rate did not remain at this high level last year and dropped to 5.0%. Due to the strength of the Canadian Dollar, corporate profitability came under pressure. With Canada's heavy export reliance, any currency shifts are immediately reflected in the bottom line of corporations. In addition to the exchange rate problem, the slowdown of the US economy is also having a negative impact on Canadian corporate profits. We believe that pre-tax profit growth in Canada will be again at the same low level of about 5% this year and next.

Business investments are strongly influenced by corporate profits, albeit with a considerable time lag. Investments in machinery and equipment rose by 7.4% last year. In line with sagging business earnings, the strong investment climate will not be repeated in 2007. We predict a growth rate for investments of only 2.3% this year and about 5% in 2008.

Governmental expenditures have been growing at a rate of 3.9% in 2006 and an estimated 2.5% this year. In view of Canada's continued budget surplus, it is likely that government investments may rise again above the 3% growth mark next year.

The employment market has been a relatively strong segment in the Canadian economy during the past two years. It grew by 2.0% in 2006. This is equivalent to over 200,000 new jobs. However, employment growth is likely to recede to an annual rate of about 2.1% this year and still lower to about 1.1% in 2008.

Similar to the USA, there is sufficient vacant office space available in Canada to accommodate any expansion of office jobs. A possible exception may be Calgary and Toronto where vacancy rates have become quite firm. Commercial construction in Canada has been advancing by 12.9% last year but we predict a slower annual growth rate (in value terms) of 6.6% in 2007 and only 4.7% next year.

Average annual office furniture sales in Canada (at retail prices and including recycled furniture) showed steady growth throughout this decade. Growth last year was 9.5% - up from 7.1% the year before - raising the market value for the first time above the C$ 5 billion mark. Due to the continued satisfactory performance of Canada's service sector, we predict office furniture consumption to slow down only marginally in 2007 and 2008, that is to about 7.5% in each year. This would bring the market to $ 5.7 billion this year and to $ 6.2 billion next year.

Furniture Canada