Dental News - Signs point to uptick for dental products industry

Fred Michmershuizen, DTA

Wed. 10 February 2010

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NEW YORK, NY, USA: After one of the worst slumps in decades, the American economy has been showing signs of improvement in recent weeks — and several factors show better days may be ahead for the dental products industry as well. The gross domestic product, which is considered the broadest measure of economic activity, expanded at an annual rate of 5.7 per cent in the fourth quarter of 2009, its biggest jump in more than six years. The growth followed a 2.2 per cent increase the previous quarter.

Meanwhile, the jobs situation may also be starting to improve. The Labor Department reported Feb. 5 that the American unemployment rate dipped from 10 per cent to 9.7 per cent in January, causing some economists to speculate that the worst job market in at least 25 years may at last be getting better.

According to a recent report from Robert W. Baird & Co., a dental equipment rebound at the end of 2009 was continuing into January and the demand for dental consumables was picking up slightly.

“We continue to believe slow/steady recovery in 2010 will lead to more normalized industrywide performance in 2011,” stated the report, titled “Dental Market Rebound Continues in January, 2010 Optimism Growing.”

The report offered several specific signs of optimism for the dental products sector, including the following:

Dental consumables demand is not just stable, but slightly improving, the report said, as volumes are flat to up slightly and 1 to 2 per cent price increases are sticking.

For distributors, a modest rotation away from telesales and Internet distributors back to value-adds seems to be occurring, while manufacturers seem to be benefiting from modest restocking at distributors and dental offices.

At the recent Yankee Dental Congress in Boston, exhibit hall booth activity was “generally upbeat,” the report said.

“All in, we continue to believe 1 to 3 per cent domestic dental consumables market growth in 2010 remains a reasonable assumption, with the upper end of that range possible if December/January trends persist throughout the year,” the report said.

Tooth Fairy giving more

Another, much less scientific, economic indicator also shows signs for optimism in the U.S. economy.

The 2010 Tooth Fairy Poll, conducted by Delta Dental of Minnesota, showed that the Tooth Fairy giving is giving more. In Minnesota, children are now receiving an average of US$1.96 per tooth, which increased significantly from the previous year’s average of US$1.62 — a 21 per cent increase. Nationally the average is US$2.13, which is a 13 per cent increase over last year’s average of US$1.88.

“This year’s Tooth Fairy Poll average reflects improvements we’re seeing in other areas of the economy,”' said Ann Johnson, director of community affairs for Delta Dental of Minnesota, in a press release announcing the poll results. “'For example, the Dow Jones Industrial Average increased 23 per cent during the same time period. The Tooth Fairy may be another indicator that the economy is starting to recover.”

Yet despite all of these encouraging signs from the Tooth Fairy and more serious economic researchers, the country may not be out of the economic doldrums just yet.

That’s because the signs of optimism from the dental industry and the surprisingly strong recent growth for the economy as a whole aren’t enough to overcome a terrible start to the year.

The U.S. economy ended 2009 with its biggest contraction since the end of World War II. It remains to be seen what will happen in 2010.

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