May Furniture Orders Rise 10%

July 28, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on July 29, 2010 New orders for residential furniture increased 10 percent in May compared with the same month last year.
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.

While orders rose again, there's still some making up to do: New orders in May of 2009 were down 17 percent from May 2008. Year-to-date, new orders for the first five months were up 10 percent over the same period a year ago. Last year at this time, new orders for the five month period were off 21 percent.

"We mentioned last month that market dates might have had some impact on April orders," which were up 12 percent over April 2009, noted Smith Leonard Managing Partner Ken Smith in the survey report. "The combined results for April and May indicated an increase of 11 percent so apparently the market dates did not affect orders all that much.

May 2010 shipments rose 9 percent over May of 2009, when shipments were down 19 percent from May 2008. Year-to-date shipments are up 6 percent over the first five months of last year, up from 5 percent ahead in April.

May backlogs rose 2 percent from April levels with incoming orders higher than shipments. Backlogs are now 40 percent higher than they were a year ago, down slightly from the 44 percent reported last month as shipments picked up some in May.

"It is somewhat good to see backlogs a bit higher," Smith said. "While some of this increase is likely the result of waiting on imports, we suspect that domestic manufacturers are happy to see them increase somewhat, so that production can be better planned."
 
Receivable levels increased 5 percent over April 2010, somewhat in line with the 4 percent increase in shipments. Receivables are only 2 percent higher than May 2009 levels, in spite of the 6 percent increase in year-to-date shipments.

"We have continued to be surprised at the low number of bad debts considering how bad business has been," Smith noted.

Inventories rose 4 percent from April levels and were 7 percent below May 2009 levels. May 2009 levels were 18 percent below May 2008 levels.
 
The number of factory and warehouse employees was about the same as last month and was up 1 percent over May 2009. May 2009 employees were 20 percent lower than that of May 2008. Payrolls increased 4 percent over April but were 19 percent higher than May
2009. May 2009 payrolls were 22 percent lower than May 2008. Year-to-date, payrolls are up 10 percent over the same period a year ago, when they were down 23 percent from the previous year.

"This marked the seventh straight month that orders were up compared to the same month a year ago," Smith said in summary. "Admittedly, the results were compared to very weak numbers in 2009, but these results seem to indicate that 2009 appeared to be the bottom of the recession for our participants.

"We had been concerned with the April results due to the High Point Market coming earlier in 2010 versus 2009, but the combined April and May order rates showed that the results were about the same."

Smith said he's hearing of price increases in materials as well as finished goods imports.

"While most retailers are fighting them, it appears that some will have to be passed along," Smith said. "As we have noted before, in spite of some beliefs, increased prices may allow retailers to make a bit better profits at their levels as well. Same story as we have discussed before--it costs the same to deliver a $300 sofa as it does an $800 sofa. 
 
"We really do not believe that 5 to 10 percent price increases will stop a consumer from buying. In reality, they haven€™t been buying that much at the low prices."