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Sales of building material are slowing down
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The building materials industry—both wholesale and retail—continued to exhibit signs of erosion in 2007, following a pattern of declining year-to-year growth since 2003. Slower growth is partly the result of poor conditions in the residential construction sector in the United States.
The U.S. construction boom, which peaked in 2005, led to an oversupplied market in 2006. This coincided with a slowdown of the American economy and, as a result, residential housing construction fell. The housing market in Canada has followed a similar but much less severe trend.
The reduction in North American housing starts has resulted in a much lower demand for lumber. Canadian production of sawn lumber dropped 11% in 2007, a fourth consecutive annual decline.
Canadian wholesalers of building supplies, such as paint and hardware, had sales of more than $45 billion in 2007—a modest 5.4% increase over 2006, and down from the moderate 8.3% growth posted from 2005 to 2006. Wholesalers of metal products posted sales of $17.8 billion in 2007, a negligible rise from 2006.
Although sales growth for many commodities reached historic peaks in 2007, retail sales of lumber and other building products advanced 8.4%, the lowest annual increase since 2001. Lumber prices also remained weak, falling about 12% through the year.
