Distributors increased their sales in the first quarter of 2016 by 1.4%, according to new data released by ASI. Although it was the 25th consecutive quarter with growth in the industry, it’s down from 3.6% in the fourth quarter of 2015, and down from 3.5% in same quarter last year.

“The fact that growth is one-third of what it was does not surprise me and is consistent with what I’ve read,” says Brian Abrams, founder and CEO of Corporate Imaging Concepts (CIC, asi/168962).

By contrast, Abrams says over the last five years CIC has grown revenue by about 30% annually.

“Our growth is made of market share winds, which is increasing the number of customers who therefore increase sales, rather than increasing the number of sales from the same amount of customers,” Abrams says.

Small distributors (with annual sales under $250,000) increased their sales the most, with 3% year-over-year growth for the quarter. Meanwhile, large distributors (with more than $1,000,000 in revenue) experienced a slight bump up in sales by 1.2% compared to the first quarter of 2015. Last year, small distributors only grew 1.5% while large distributors grew by 3.6%.

“Counter to your findings, we are seeing the strongest growth in our larger affiliates,” says David Woods, president and CEO of Top 40 firm AIA Corporation (asi/109480). “Our 2016 Q1 sales were 2.8% above prior year.  We have seen strong growth over the past five years, and expect to have another good year in 2016.”

The Counselor Confidence Index, which gauges the health and optimism of distributors, measured at 111 for the quarter, down from 114 at Q4 of 2015. Despite the decline, the Counselor Confidence Index has remained relatively unchanged over the last three years.

“After Q1, we are on par with other large distributors in our industry as far as growth,” says Kris Robinson, executive vice president of Top 40 distributor Promoshop (asi/300446). “Of the first three months, January was by far the slowest and even slower than January of 2015. But as the quarter progressed, so did our sales and we are still tracking to have a larger year of sales this year over last year.”

With a six-quarter moving average of 3.5% growth, the promotional products industry continues its period of slowing growth. In addition, only 30% of distributors reported an increase in sales this quarter while 22% reported a decrease. Nevertheless, the stable position of the Counselor Confidence Index reflects a general sense of optimism among distributors as they plan for the remainder of this year and into 2017. Just more than half of distributors (51%) are predicting a year-over-year increase in sales overall for 2016.