US Demand to Rise 4.8% and Hand Tools Is Forecast to Expand 4.8%

US demand to rise 4.8% annually through 2016 Demand for power and hand tools in the US is forecast to expand 4.8 percent per year to $13.1 billion in 2016, a turnaround from declines recorded during the 2006-2011 period. Growth will benefit in large part from a recovering construction environment, specifically a rebound in housing starts. The continued popularity of DIY and home remodeling activities among consumers will provide additional sales opportunities. Furthermore, the improved US manufacturing environment will support gains. However, intense price competition in nearly every category of tools will serve to restrain advances. Additionally, distribution channels of power and hand tools continue to evolve, as electronic commerce has become a significant factor in this industry. Power tools to continue outpacing hand tools Demand gains for power tools will continue to outperform those for hand tools, as power tools benefit from greater capacity for innovation, especially among cordless electric tools. For instance, lithium-ion batteries are becoming increasingly prominent in cordless tools, as they offer a lighter weight and longer run time than the nickel-based batteries they replace. Increases in the hand tool market are ultimately limited by their inherently simple design, which allows for only modest improvements and pricing increases. In addition, many hand tools are designed to last decades, restraining opportunities for replacement sales. Professional demand to outpace consumer market Professional demand will outpace consumer gains through 2016, due to a rebound in housing starts and increases in manufacturing output. Professionals typically use tools on a daily basis and, as a result, must replace tools more frequently. Professionals are often willing to pay more for higher quality tools, since the initial investment will pay off over the long run through better performance and longer tool life. Tool demand among consumers will also record strong growth. Consumers are more likely to purchase tools based on price, and rarely require more expensive hydraulic and pneumatic types. Consumer demand is tied to individual participation in home maintenance and repair, various hobbies, and other diverse factors. Source: MarketWatch