June Furniture Orders Rise 9%

September 1, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on September 2, 2010

The furniture industry is still catching up from a bad 2009, with June furniture orders rising 9 percent over June '09. June furniture shipments rose 13 percent, 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 and shipments rose in June over the prior year, June 2009 orders had fallen 16 percent from June 2008; shipments were down 19 percent from June '08.

Year-to-date, new orders remained 10 percent higher than the first half of 2009, when orders for the first half of 2009 were 20 percent below the first half of 2008. This puts orders for the first half of 2010 12.5 percent below the first half of 2008.

Year-to-date, shipments are now up 7 percent (up from 6 percent last month) compared with the first half of last year. Last year's first 6 months were off 20 percent from the first half of 2008.
 
Backlogs were up 35 percent over June 2009, down from a 40 percent increase reported last month. Backlogs were 5 percent lower than May 2010, which was part of the reason for the 13 percent increase in shipments.
 
Receivables were 6 percent higher in June 2010 compared with June 2009.

"This increase appeared very reasonable in light of the monthly shipment increase, as well as, the year-to-date increase," Smith Leonard Managing Partner Ken Smith said in the report. "While we continue to hear of some stretching out in days sales in receivables, we think that overall, receivables are in reasonable shape."

Inventories increased 5 percent over May and were 2 percent higher than June 2009. In June 2009, inventories were 20 percent lower than June 2008 so it appears that inventories remain under control, even considering the increases in business.

"From what we have heard, most companies have pretty much rid themselves of their older or obsolete inventories in order to create cash (or reduce borrowings)," Smith saild. "This seems to be allowing inventories to remain at lower levels in spite of the increase in business. Also, generally speaking, most companies appear to continue to try to keep levels low."

The number of factory and warehouse employees in June was flat with May 2010 and was up 2 percent over June 2009. June 2009 employees were 19 percent lower than June 2008. Payrolls were 17 percent higher than June 2009 and 9 percent higher than May. June 2009 payrolls were 22 percent lower than June 2008. Those figures appear to reflect improved business conditions.

"While we still have a ways to go to get back to 2008 numbers, at least the increases continue to come," Smith said in summary. "Not to be negative, but we need to remember that 2008 results were also off for the most part in the double digit range especially in the last half of the year.
 
"We had heard from some that business fell off some after Memorial Day, but the June results did not seem to reflect that."

Smith noted that continued talk about the slow economy, the potential for a double dip, stock market woes, and continued high unemployment continues to keep consumers anxious; and that consumers seeking to reduce their debt load puts a damper on non-necessary spending.

"On the other hand, we are still selling furniture with some improved results in spite of all the bad news," Smith said. "That's not all bad. We just need the economy to show some strength, but most seem to feel that might be a while. In the meantime, stay lean and hold on until the overall situation gets better."