“Retail sales are stable right now with a 2.8 percent annual growth, but disposable personal income has barely increased with only 0.6 percent growth during that period while inflation has increased 2 percent,” explained Andrew Duguay, senior economist, HARDI. “This trend is not sustainable. Unless we see significant improvements in the employment and wage growth trends, consumers will likely cut back on their spending.”

HARDI reports that the overall annual growth rate has been in the 5- to 6-percent range since the spring and closed out July at the lower end of that range at 5.2 percent.

 “During the month there were fewer cooling days than average in the Midwest and South, while the West, Mid-Atlantic, and Northeast were warmer-than-normal,” said Duguay. “Consumers are neither rapidly increasing their spending with the housing value recovery nor lowering their spending despite higher payroll taxes. That is one reason the annual growth rate is maintaining the horizontal trajectory that has been in place for most of 2013.”

As for the days sales outstanding (DSO), a measure of how quickly customers pay their bills, Brian Loftus, HARDI market research analyst, reported that they continued their normal seasonal pattern.

“The DSO declined again in July and is very close to where it was last July,” he explained. “The annual trough has been late summer in the mid-40’s these past two years while the economy has been recovering.”

HARDI noted that members who participate in the TRENDS study do not receive financial compensation in exchange for their monthly sales data and can discontinue their participation without prior notice or penalty. Participation is voluntary, and the depth of market coverage varies from region to region. An independent entity collects and compiles the data that can include products not directly associated with the HVACR industry.

For more information, visit www.hardinet.org.