February saw a welcome rebound in the Pro AV Sales Index (AVI-S), with a 2.9-point increase from 51.1 to 54.0. While this is clearly a positive development, the negative aspect is that 54.0 is slow growth by Pro AV’s high standards.
For example, the index only had one month lower than 54.0 in the 42 months of pre-pandemic data. Still, a solid acceleration is more than welcome. This is made more positive given the headwinds coming in the form of tariffs and the related uncertainty.
[AVIXA Report: Pro AV Expansion Slows Again]
Commenters told us in no uncertain terms that these measures, and the lack of clarity about the business landscape in the coming months, are major challenges and barriers to growth. Providers don’t know what prices to promise, and end users don’t know how to budget for upcoming project costs. Unfortunately, the uncertainty seems unlikely to abate, as the cycle of announcing and then postponing tariffs on Mexico and Canada is set to continue into April.
The primary impact of tariffs is on prices: The channel pays a significant tax as the equipment crosses the relevant border, then must recoup at least some of that cost from the end user. Unfortunately, there are also secondary growth effects from tariffs. In the United States, the growth impact of the tariffs can be seen in equity markets, where the S&P 500 is now down from Election Day—a very unusual result for a Republican president.
This impact can be seen more acutely in the first two days of the first week of March, when it became clear that the Trump administration would indeed be imposing the previously postponed Canada and Mexico tariffs (which were, ultimately, mostly postponed again). These days saw the S&P fall by 3%, highlighting the market's overall dissatisfaction with the ongoing trade turmoil.
[Tariffs and Pro AV: Expectations and Strategies]
The AV Employment Index (AVI-E) stayed unchanged at 55.3 in February. Last month, the AVI-E of 55.3 was a bright spot in clear contrast to the low AVI-S. There is still some of that sentiment since typically the AVI-E is closer to 50 than the AVI-S (employment changes more slowly than sales), but overall, the two indexes are now roughly aligned. They are both telling a story of slow but still meaningful growth.
In the wider economy, the U.S. labor market saw the addition of 151,000 jobs, a decent level that did not stop the unemployment rate from ticking up a tenth of a percent to 4.1%. Employment is a well-known lagging indicator, so any fallout from tariffs and uncertainty would not be expected to factor in fully for a few months at least.
The Pro AV Business Index report is derived from a monthly survey of the AVIXA Insights Community, a research community of industry members that tracks business trends in commercial AV. For more information about joining the AVIXA Insights Community, visit www.avixa.org/AVIP.
