Sales within the promotional merchandise market have been maintaining steady growth but the mood is beginning to change, according to new statistics.

The figures, from sourcing specialist Sourcing City, revealed that growth in the 12 months to June was in line with last year’s increases, with promotional pens and bags topping the list of products.

While new start-up companies continued to be prevalent during the first half of 2008, Sourcing City found that during early June “the mood in the market was beginning to change”.

“Distributors appeared mixed in their views on the current market,” said David Long, managing director of Sourcing City. “Some felt the enquiry levels had gone ‘quiet’, while others indicated that their activity was still relatively busy.

“Naturally, local sales focus and customer sector profiles have an influence on these statements. Several promotional merchandise suppliers, however, have indicated that the market seems to be slowing and, although the start of the summer holidays could have been a factor, it was felt the slowdown was not following normal market seasonal cycles.”

The summer also saw a number of established distributor companies cease trading, owing trade suppliers significant sums of money.

“There is certainly a feeling in the market that more closures may follow in the second half of the year, involving both distributors and suppliers,” Long warned.

“Another potential problem the market faces is the nervousness of suppliers to extend or even maintain large credit terms. Suppliers will feel the need to tighten their credit terms to minimise their risk of exposure. This in turn may cause credit availability and cash flow pressures for distributors.”

Sourcing City also identified growth areas in its report, highlighting how environmentally products, particularly eco-friendly bags, featured heavily in the list of most popular and fastest-growing products in terms of sales to end-user companies.

Sourcing City works with over 2,000 suppliers of promotional merchandise, providing a channel for selling more than 50,000 individual products.

Pictured: Sourcing Planet suppliers at the National Incentive Show in Birmingham NEC this month.