Furniture Orders up 9% in March

May 31, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on June 1, 2010

While a lot of catching up remains to return to pre-recession levels, new retail orders for furniture rose 9 percent in March compared with the same month in 2009, when orders were off 17 percent compared with March 2008; and were up 2 percent over February. Shipments rose for the fourth straight month in March, increasing 5 percent from March 2009 levels and 12 percent over February.

That's according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

Year-to-date, new orders remained 9 percent ahead of the first quarter of 2009; and year-to-date shipments are 5 percent higher than the first quarter of 2009 when shipments were down 21 percent.

Backlogs remained strong, up 34 percent over last March and up slightly over February.

"As imported products begin to flow after the Chinese New Year, we expect backlogs to work their way back down some although backlogs in March 2009 were down 21 percent from March 2008," Smith Leonard Managing Partner Ken Smith said in the report.

Despite increased shipments, receivable levels remained low, falling 2 percent from February and 2 percent from March 2009.

"It appears that most companies are keeping a close eye on their accounts, in spite of some street talk about some customers' accounts aging out a bit more than normal," Smith noted.

Inventories fell 5 percent from February levels and were 19 percent lower than March 2009, about the same as the February to February comparison.

"We also hear that much of the excess inventories have now been disposed of, so hopefully most of the sales increases are at more normal selling prices versus some of the heavy discounting that occurred in 2009," Smith said.

The number of factory and warehouse employees fell 3 percent from March last year, versus a 5 percent decline in February. The employee results were flat compared to February. Payrolls on the other hand were up 15 percent over March 2009 and 17 percent over February. The March to February results were a bit skewed with March having more working days.

"We are hearing that more manufacturers are working more hours with the people they have and a few of the participants have actually increased the number of people they have working," Smith said.

In summary, Smith said the survey's March results produced more positive news for the industry.

"Orders were up for the fifth month in a row on an overall basis and while 61 percent of the participants reported increased orders, a number of participants were only off a few percentage points," he said. "Admittedly, we are still comparing to weak results in the first quarter of 2009, but it does appear that we are coming out of the slump. It will be interesting to see what the April and May results are as we should feel the impact of what was believed to be the best High Point Market in the last several. We continue to hear that business does seem to be picking up."
 
While consumer confidence is moving in the right direction, Smith noted that recent volatility in the stock market and related bad economic news will not help.

"Add to that all the worldwide bad news stories, the oil mess in the Gulf and various other stories, it may take a while to get confidence back to pre-recession levels," he said. "Yet, the housing market seems to be helping. Not only are existing home sales up, but so were new home sales. And there appears to be growing stability in home prices. This along with some improved consumers' moods, should mean that furniture sales should continue to improve."