This article has been republished with the permission of Furniture Today USA.
Words: Powell Slaughter
After increasing for 13 straight months, new orders for furniture fell 10% in September compared with the same month last year.
That’s according to the latest Furniture Insights survey from High Point accounting and consulting firm Smith Leonard. September orders were down for 62% of participating residential furniture manufacturers and distributors.
“The results from September were somewhat expected as our recent conversations, including our Market visits, had indicated that business had softened,” Smith said in the survey report. “In addition, hurricanes impacted business and even slowed some market traffic. We would expect to see some pick-up over the next few months as those affected in Texas and Florida and other areas begin to try to recover and rebuild.”
Year to date, new orders remain 4% ahead of the same point in 2016, with approximately 61% of survey participants reporting increases.
Through September, shipments are 5% ahead of the first nine months of 2016. Approximately two-thirds of the participants have reported increased shipments year to date over the same period last year.
Backlogs in September were about equal to August backlog levels as shipments and orders were about equal. Backlogs were 4% lower than September 2016.
Receivable levels rose 3% in September over the same month last year, in line with the increase in shipments, both year to date as well as for the month. “Receivable levels appeared a bit high in August, so we were glad to see them get back in line in September,” Smith noted.
Inventory levels rose 7% from September 2016, up from a 3% increase reported last month. “But inventories were only up 1% over August levels, so we will check next month to see if the variations were just timing issues,” Smith said.
Factory and warehouse employment fell 2% from September 2016 and remained even with August 2017. Factory and warehouse payrolls rose 2% over September 2016, the same as reported last month. Year-to-date payrolls remained 2% ahead of the same period last year.
Smith noted in summary that high consumer confidence and low unemployment and interest rates should be good signs for the industry; he also noted that housing, while not as positive, keeps recovering from 2009.
“Eventually, as we see with our own businesses, it is hard to keep beating last year’s numbers over and over again,” he said. “So we think both existing and new home sales are at good enough levels to keep furniture buying reasonably strong.
“While the residential furniture business overall is pretty good, as always we have some winners and some not doing as well. Obviously all models are not the same, whether in product or customer base. Each of these continually change. But, hopefully, business will continue to pick up for all.”