Certainly, no one from AVIXA and no one across the pro AV landscape is ready to declare the end of the pandemic-driven recession that’s cost millions of people their jobs and put some companies in a deep financial hole, but the shift of the July Pro-AV Business Index into growth territory is one small step.
The index sat at 53.7 for sales and 51.2 for employment in July, the first time we’ve seen both numbers on the growth side of the ledger—above 50—since the coronavirus outbreak hit the U.S. in March. AVIXA economic analyst Peter Hansen believes that growth is sustainable in the long term.
“We like two things about this: one, it’s actually growing and two, it’s a continuation of the recovery trend,” says Hansen. “We’re pretty confident and optimistic this trend will continue and that the market’s going to continue to grow.”
The Pro-AV Business Index hit its lowest mark in March and has continued to grow in every month since, but July marked the first time the sales number was comfortably above 50.
“We think ceiling is higher than 53.7,” says Hansen, noting the AVIXA market intelligence team also tracks end user billings and that number sits at 61.4 for July. “Those numbers tend to move together. That makes us confident provider sales are going to progress.”
Related: AVIXA Industry Expects Full Recovery of Pro AV in 2022
AVIXA is trying to focus more on the demand side of the pro AV industry, says senior director of market intelligence Sean Wargo.
“That will give us a better sense of what’s coming,” he says. “You’d hope to see that lagging effect to see sales follow billings.”
“These aren’t absolute metrics. They’re directive. Looking at it from a scale perspective, it shows that the industry is in a period of relative growth, Clearly, providers are digging out of really deep trough so the indices will show things are getting better even if they’re not in an extreme growth mode,” he says.
Inside the Pro-AV Business Index
Hansen sees no reason to “complicate the analysis” of the latest Pro-AV Business Index.
“Growth versus contraction is the big deal,” he says. “I would look for us to get up closer to 60, which is where the index was essentially from its inception (in September 2016) until March.
“We know the industry was growing 5-8 percent per year. That’s the kind of growth we want to see to indicate a full recovery, but let’s not overthink it and complicate the analysis here,” he says. Wargo compares it to the difference between a majority and super-majority on a piece of federal legislation.
“As you zoom in on the curve, you can see the blips,” he says. “The indices on the billing side might help us see that coming a little bit.”
The timing of the move into growth on both sales and employment didn’t surprise Hansen or Wargo.
“Pro AV fits into so many parts of the broader economy, from conferencing and collaboration to education spending,” says Hansen. “When you look at what’s going on there, you could see some of this coming.”
Wargo notes there was almost an economy-wide shutdown in March and April.
“Growth is not hard to find after that,” he says, noting “long-term scarring” could make it tougher to get back to return to 2019 levels for a while. AVIXA’s annual Industry Trends and Outlook Analysis report says pro AV won’t return to 2019 levels until 2022.
Hansen notes IOTA measures by the year but companies could see revenue growth in a particular month ahead of the 2022 projection. He expects the overall pro AV landscape will be in better shape by the second half of 2021, but the annual numbers will pale in comparison to 2019 for most companies.
“We’re starting to look up from a pretty low spot,” says Hansen. “People are right to be happy, but no one’s too overly confident or eager about where we are right now. We’re building from a tough spot. We have a long struggle ahead of us.”
