BlueTarp Financial

This article originally appeared on the PROSALES website.

BlueTarp Financial’s Building Supply Index experienced the most significant year-over-year (YOY) decline since the second quarter of 2016. The index also reported a YOY decline in the fourth quarter of 2018.

The decline in the index is driven by a drop in consumer confidence, according to the Portland, Maine-based credit management company. Consumer confidence, reported by The Conference Board, peaked at 137.9 in October 2018, before dipping to 124.2 in March 2019, the lowest reading in over a year.

The Building Supply Index—based on public data such as consumer sentiment, building permits, and construction spending, along with proprietary data—was a seasonally unadjusted 120.97 in the first quarter of 2019, compared to the seasonally unadjusted average of 125.59 in the first quarter of 2018. The seasonally adjusted, 12-month trailing average was 133.39, down 0.60 points from the reading for the fourth quarter of 2018.

The index value of 100 is benchmarked to April 2013, and values above 100 reflect healthy economic activity. BlueTarp bases its proprietary data on accounts with more than 120,000 pro customers that it manages for more than 2,000 building material suppliers nationwide.

BlueTarp Financial

BlueTarp conducts a supplemental survey gauging contractor sentiment and sales. The survey found that 20% of contractors reported lower sales in Q1 2019 compared to the year-earlier period, driven largely by unfavorable weather. However, over half of respondents expect growth in the economy in the next 12 months, which BlueTarp said mirrors “the rebound in the equity markets in Q1 and continued strong GDP and employment news.”

“Our index picked up a noticeable drop in spend per contractor in Q1,” said BlueTarp CEO Scott Simpson. “We suspect this to be weather-impacted and will rebound but it could be something more meaningful if the trend continues in Q2.”

BlueTarp Financial

One of the ways BlueTarp tracks trends is with an X-Y axis chart showing customer preference in terms of both spending and delinquencies. For the past several years, BlueTarp says accounts have been in the Cautious quadrant, in which spending is high, but the delinquency rate is slightly worse than desired.