US HVAC&R sector – growth path disrupted by the pandemicMay 2020

By Zoltan Karpathy, Operations Manager, BSRIA WMI

In the period leading up to March 2020, the US has experienced its longest economic expansion on record with 128 months of growth to February 2020 boosted by fiscal stimuli in 2017 and 2018.

The non-residential construction market increased by 3.7% in 2018 and 2.6% in 2019 with significant investments in offices and education.

In this context BSRIA’s recent HVAC & Controls market studies showed healthy growth in the USA in the period leading up to the COVID-19 outbreak.

The US Building Automation and Controls (BACS) product market reached around US$2 billion in 2019. The above average growth was related to software, sensors and non-HVAC controllers as BACS solutions are increasingly more popular than HVAC systems without control and monitoring features.  Software and sensors were the fastest growing market segments with increasing demand for preventative maintenance, energy efficiency and advanced analytics.

A recent, deeper dive US study on HVAC valves, including zone, distribution and plant valves, balancing and PICVs, HVAC air volume dampers and actuators, fire safety dampers and actuators, and sensors installed with an HVAC system (environmental, air quality, multi-sensors, light dependant and occupancy) show that this sector was worth US$ 1.2 billion in 2019 with high growth prospects.

BSRIA has a long tradition in researching the air conditioning industry and according to our latest report, the US air conditioning market was worth almost US$ 20 billion in 2019, up by around 6% from the year before. Improvement to efficiency and combination of approaches in the same system or project (e.g. ducted and ductless) are the main trend. Regarding refrigerants, suppliers are planning to introduce new, lower GWP gases besides the progress in regulation. The year 2023 will be important, as efficiency standards for ducted and rooftop units are set to be enhanced and new refrigerants may be required at least in some states, such as California.

In terms of renewables, BSRIA sees the popularity for ground/water to air heat pumps on an upward trend in the US, but the hydronic heat pumps’ awareness for space and/or water heating remains limited across the country. The local market is largely represented by cylinder-integrated heat pumps for hot water. Adoption of new building standards in California has pushed this market segment which in total grew by almost 14%.

The US economy has been shut down from March as an attempt to contain the virus, with a result of a staggering 26 million people filing for unemployment benefits. Mr. Kevin Hassett, Senior Economic Adviser to the White House, predicts that the GDP can even drop by an annualized rate of 30% in the second quarter. Goldman Sachs predicts a 15% unemployment rate in the US by mid-year in 2020, an increase from the current 4.4%.

Some US AC equipment manufacturers see the US market drop in 2020 (by around 15% for residential, and around 25% for commercial and refrigeration). There were some US factory closures at the end of March, but majority have resumed work after a few weeks; one of the important changes due to the COVID-19 situation affects the supply chain, with a shift from China to Mexico (although stuttering somewhat due to factory closures south of the USA border). It has been noticeable that contractors acquired lower stocks of residential products, with commercial and refrigeration projects delaying orders of HVAC&R equipment.

With macroeconomic indicators stumbling, intensive search is going on for safe ways of resuming value added activities across the economy. In the construction and HVAC&R sectors it will likely be a phased approach: outdoor work in small teams will be most likely to resume first, followed by indoor work on new build sites and then finally internal retrofit / refurbishment work. Also, in various office/commercial/institutional buildings the post-COVID-19 period creates a new use-case and value proposition scenario for occupancy, motion and temperature sensors, tied in with advanced data analytics to ensure the safe return of workforce while maintaining health guidelines and social distancing.

To assess the full impact of COVID-19 on the US HVAC&R sector, BSRIA aims to publish an update of its market studies at the end of September 2020.

Note to editors:

To find out more about BSRIA HVACR & Controls market studies contact us at:

• America sales enquiries: BSRIA USA: ¦ +1 312 753 6803,
• China sales enquiries: BSRIA China: ¦ +86 10 6465 7707,
• All other sales enquiries: BSRIA UK: ¦ +44 (0) 1344 465 540,

Zoltan Karpathy Operations Manager, BSRIA WMI

BSRIA Worldwide Market Intelligence

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