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U.S. APPLIANCE INDUSTRY FACTORY UNIT SHIPMENT OVERVIEW

The appliance industry in the United States continues to show strong signs of recovery. Appliance factory unit shipments are largely up for the year – significantly so in most major appliance categories.

Sales in electronics and appliance stores are also up for this year. Sales were $8.54 billion in April 2010, down slightly from $8.57 billion during March 2010 but up from the $8.23 billion recorded in April 2009, according to data from the U.S. Census Bureau (census.gov).

However, not every indicator is positive, and overall economic uncertainty lingers. This, coupled with the unknown impact of the recent ending of two federal stimulus initiatives, leaves the U.S. appliance industry hopeful, although feeling somewhat insecure.

HOUSING'S IMPACT

Home sales have demonstrated inconsistent but generally positive movement in 2010. Although the end of the U.S. 2010 Home Buyer Tax Credits may hurt the housing market overall.

Home sales are a primary factor in the success of the appliance industry. Home builders buy new appliances, naturally, to equip their new homes. Even consumers who move into an existing home often use that opportunity to buy new appliances.

The Home Buyer Tax Credits expired on April 30, 2010. To qualify for the tax credit, buyers needed to sign a contract on a home by that date, with closing no later than the end of June 2010. Much speculation has concentrated on the impact that the tax rebates had on housing’s mostly positive but fitful performance so far during this year.

The appliance industry’s concern: if the tax credit was indeed a significant factor in spurring home sales, will post-tax credit home sales dwindle and cut into the strong factory unit shipments that the industry has enjoyed so far in 2010.

A survey from Prudential Real Estate and Relocation Services Inc. (prudential.com), conducted in mid-April, suggests home sales will not be significantly adversely affected. One thousand Americans between the ages of 25-64 years with at least $35,000 in household income were surveyed. Among consumers actually shopping for homes, 65% said the end of the tax credits will have little or no effect on their interest in purchasing a home.

National Association of Home Builders(nahb.org) Chief Economist David Crowe pointed out that a jump in U.S. housing starting in April was likely not due to the expiration of the home-buyer tax credit. Writing in NAHB’s Eye on the Economy, Mr. Crowe noted that in order to get the tax credit, the homes would have to close at the end of June. That would allow for just three months of construction time instead of the average of five months.

Builder optimism continued to grow in April, according to the May NAHB/Wells Fargo Housing Market Index (HMI), which was up three points from 19 to 22. This performance reflected the second monthly increase in a row.

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