Consumer confidence indicators are good, although the election year brings uncertainty.
Despite some concern about the impending election year affecting consumer confidence, most landscape industry members say their customers had no problem spending money in 2015, and they expect the same in 2016.
Derek Blumberg, for example, says politics is one area of uncertainty for him. He’s the owner of Quality Seasons, a $2 million full-service residential landscape company based in Lakeville, Minn.
“I’m fairly concerned, but I don’t go to sleep at night worrying about it,” he says.
The 2016 presidential election could change things, but no matter the outcome, Blumberg says he plans to do a price increase in 2016 because he won’t do one in 2017.
“We don’t want to raise prices the spring after an election,” he says. “There can be a lot of emotions going on.”
Consumer market
Speaking of emotions, the latest Conference Board Consumer Confidence Index data show consumers were more confident this October—with a reading of 99.1 (compared to a baseline of 100 in 1985) than they have been any of the past few years at this time. The October readings were 94.5 in 2014, 71.2 in 2013 (due to the government shutdown) and 72.2 in 2012.
A similar indicator, the University of Michigan Index of Consumer Sentiment, also showed improvement at 93.1 for its early November reading—a level higher than any year since 2004. The report noted consumers held the most favorable inflation-adjusted income expectations since 2007 and buying plans for large discretionary purchases improved.
Commercial market
On the commercial side of the market, some data show confidence is waning, but landscape companies report a strong year on this side of the business.
The Conference Board’s quarterly Measure of CEO Confidence came in at 48 for the third quarter, down from 58 in the second quarter. A reading of more than 50 points reflects more positive than negative responses. Likewise, the National Federation of Independent Business Index of Small Business Optimism remained at a below-average reading of 96.1. (The 42-year average is 98.)
On the bright side is the Building Owners & Managers Association International’s 2015 Experience Exchange Report, an annual office sector benchmarking study, which showed increases in income and expense categories for privately-owned U.S. office buildings. Namely, the “roads and grounds” expense category increased 8.1 percent, from 25 cents per square foot in 2013 to 27 cents per square foot in 2014.
“We’ve seen since 2007 on up, people weren’t putting as much money into landscaping,” said Tom Hougnon, president and CEO of Reliable Property Services, a $32 million commercial landscape and snow firm with operations in three states. “Now, in some cases, they have to, whether it’s a safety issue with overgrown trees and shrubs or just old sign beds that need to be updated. We’re seeing more and more customers putting money back into their landscape, which obviously is a positive for us.”
photo: ©istock.com/pepo123
