For the first six months of 2006 the total paint industry continued to show growth over the same period of 2005. The total industry increased in shipment volume by 5.5% and in shipment value by 7.5%. Both the Architectural and Product OEM Segments showed increases for the six months while the Special Purpose Coatings recorded a decline.
However, the second quarter results show a softening of the growth rate for the total industry. In the second quarter the total industry increased by only 0.4% in volume and 2.2% in shipment value. This softness was primarily due to the weakness of Architectural coatings for the second quarter.
Architectural Coatings continued to show good growth for the six-month period with an increase in shipment volume of 6.0% and an increase in value of 8.8% over the 2005 period. The slowdown in housing starts and housing resales was passed on to the segment as shown by the second quarter results. During the second quarter of 2006 shipment volume declined 2.2% from the 2005 quarter, and shipment value declined 1.3%. This decline was expected because of the housing slowdown and should continue to impact the segment for the next few quarters or until housing begins to grow again.
Product OEM coatings showed increases for both the quarter and the six-month periods. For the six months, the segment grew 9.2% in shipment volume and increased 7.2% in value. The second quarter had increases of 5.5% in shipment volume and an increase of 3.6% in value. The strength of the segment indicated that the manufacturing part of the U.S. economy was still healthy and growing. How long the segment will continue to grow is questionable since the automobile industry appears to be slowing down, which directly affects paint industry shipments.
Special Purpose coatings had a good second quarter with increases of 1.4% in volume and 8.9% in shipment value. The second quarter helped the segment recover from the slow first quarter. The six-month period of 2006 showed a decline in shipment volume of 6.3% while shipment value still managed to increase 4.8%. With the revision of numbers for the first quarter of the segment that took place after the Annual Report from Census, the results are never completely believable. The highway repair and maintenance industry, including bridge construction, appears to be growing during the current year. Other repair, maintenance and construction expenditures may not be as strong as last year, although repair and reconstruction after the 2005 hurricanes may still be providing sales increases for the segment.
The third quarter will be the real deciding time for the growth or decline of the industry for all of 2006.