Visualizing The Sales Growth Slowdown Since 2008

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Includes: BME, GRX, IRY, IXJ, PBJ, THW
by: GaveKal Capital Team

One way that we like to visualize growth rates is by drawing growth trend lines. By this, we extrapolate various compound annual growth rates (2%, 4%, 6%, etc.) and plot them against level statistics (in this case total sales). We index everything to 100 at the beginning of the chart and by doing this, we can see what the CAGR is for the entire period plotted in the chart as well as when growth rates either accelerated or decelerated during certain years.

When we plot total sales, we can clearly see how different of a sales growth environment it has been since 2008 compared to 2000-2008. For example, developed market companies has been growing sales at a roughly 5% annualized growth rate since 3/31/2000. From 3/31/2000 to 9/30/2008, however, sales grew at a robust 10% annualized growth rate. Since then, sales have slowed to a growth rate of less than 1% per year.

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Sales Growth Slowdown

Not surprisingly, the sales growth slowdown since 2008 has been widespread. However, when we look at sales growth by industry group, we still see a couple of industries growing at a double-digit percentage pace. Below, we show one of the fastest and one of the slowest growing industry groups and compare its 2000-2008 growth rate to its 2008-current rate.

Out of 24 industry groups, DM Health Care Equipment & Services has had the fastest growth rate. This industry group has been growing sales just a bit more than 12% annually since 2000. Sales growth since 2008 have been about 7% annually. This is a healthy growth rate, but it is less than half the 18% growth rate it experienced from 2000-9/30/2008.

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On the other end of the spectrum, you have DM Food, Beverage & Tobacco. This industry group has had one of the slowest sales growth rates since 2000 at just a bit above 4% growth per year. From 2000 to 9/30/2008, sales grew at almost twice the rate at nearly 8% annually. However, since then, sales growth for this industry group has been just 0.49% annually, which is even down from a 4% annualized growth rate from 9/30/2008-2014.

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