Pulled down by December quarter sales that failed to meet previous forecasts, most of the products included in the ABARES’ sales forecasts under-performed. Looking forward to the December quarter of 2018, Treated Structural products are forecast to rise 5.0% and Landscape products a very solid 18.1%. Untreated Structural products (both the larger and smaller dimensions) are forecast to decline over the same period.
Despite missing the previous forecast (by 6.4% or 13,372 m3) for the December quarter, Treated Structural softwood sales are expected to continue their strong growth into 2018, as the chart below shows. However, sales growth is forecast to be slower than in previous forecast periods.
Looking forward, the updated forecasts for the March 2018 quarter onwards have been revised downwards, reflecting the decline in actual sales volume. Sales are forecast to decrease in the March 2018 quarter by 0.5 per cent to 194,321 m3, followed by increases in the June and September quarters of 3.8 per cent and 4.1 per cent, to peak at 210,054 m3. Sales are forecast to drop by 2.4 per cent to 205,024 m3 in the December 2018 quarter, 5.0 per cent higher than current sales.
The situation is even stronger for Landscaping products, December quarter sales of which were softer than forecast (by 11.5% or 5,377 m3), but were within the confidence intervals for the forecasts. However, as the chart again shows, sales are forecast to grow by the December quarter of 2018, but only after dipping earlier in the year.
ABARES writes, “Looking forward, the updated forecasts for the March 2018 quarter onwards have been revised downwards with sales expected to fall sharply in the March quarter by 16.0 per cent to 34,865 m3. This is expected to be followed by sustained growth in sales, increasing by 5.2 per cent in the June quarter and by 23.8 per cent in the September quarter to 45,414 m3. Sales are expected to peak at 48,997 m3 in the December 2018 quarter, 18.1 per cent above current sales.”
Untreated structural products (both the smaller dimension <120 mm and the larger dimension >120 mm grades) are forecast to decline through to the December quarter 2018. However, only the <120 mm grade fell below its target for the December quarter of 2017 (6.4% or 11,847 m3 lower than forecast). Despite some forecast recovery in the middle of 2018, by year end, the chart shows sales are forecast to be down.
As ABARES says in its commentary on Structural <120mm products, “… the forecasts for March 2018 quarter have been revised downwards, with sales expected to fall by 5.4 per cent to 164,666 m3 in the March 2018 quarter. Sales are expected to recover in the June quarter and September quarters, increasing by 6.6 per cent and then 5.8 per cent to peak at 185,682 m3. Sales are expected to decline in the December 2018 quarter by 11.1 per cent to 165,099 m3, 5.2 per cent lower than current sales.”
The >120mm grade exceeded forecasts by 16.8%, and is forecast to grow strongly by the end of 2018, as the chart below shows.
ABARES comments that “…the updated forecasts for the March 2018 quarter onwards have been revised downwards with sales expected to fall sharply in the March quarter by 16.0 per cent to 34,865 m3. This is expected to be followed by sustained growth in sales, increasing by 5.2 per cent in the June quarter and by 23.8 per cent in the September quarter to 45,414 m3. Sales are expected to peak at 48,997 m3 in the December 2018 quarter, 18.1 per cent above current sales.”
Although they are still relatively new, there are important lessons already available from the ABARES’ forecasts. First is that though they are never precise, forecasts are now routinely within the 95% confidence interval. Second, there is some product consistency emerging, that links into reasonable expectations about the state of the housing construction market. This second point is most critical, because as the housing construction market shifts and changes, the forecasts could become ever more useful as predictors of actual sales.
