Furniture Orders Fall in October

December 29, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on December 30, 2010

Furniture orders from retailers fell in October, according to High Point accounting and consulting firm Smith Leonard's survey of manufacturers and distributors.

It was the second straight month orders fell. October orders were off 5 percent compared with October 2009, and down 4 percent from this year's September levels. Year-to-date, new orders are up 5 percent over the first 10 months of 2009 versus a 6 percent gain through September.

October shipments rose 3 percent over October 2009, but fell 6 percent compared with September 2010. Year-to-date shipments were 8 percent ahead of last year, when they were off 18 percent from 2008.

Backlogs fell slightly from September due to shipments exceeding orders. Backlogs in October were 3 percent higher than a year ago, down from a 7 percent increase reported last month.

Receivables were up 9 percent over October 2009, "and much more in line with year-to-date shipments than they have been over the last couple of months," noted Smith Leonard Managing Partner Ken Smith in the Furniture Insights survey report.

Receivables remained flat compared with September despite decreased shipments.

"There were a couple of pretty large bankruptcies at retail in late November that may have some impact in the results for November and December," Smith said.

Inventories fell slightly but remained 19 percent ahead of last year's levels.

"We continue to believe that most of this relates to better order rates early in the year that created stocking more inventories," Smith said. "As orders fell off, it was not easy to adjust purchases and inventory levels. We expect inventories to come down over the next couple of quarters."
 
Factory and warehouse employment fell 1 percent from October 2009, the first decline since March 2010; and employment fell 2 percent from September levels. Still, October payrolls were 2 percent higher than the same month last year; and 10 percent higher year to date.

In his summary of survey results, Smith noted that October's decline in new orders in October was not totally
unexpected, based on conversations with manufacturers and distributors.

"As has been the case in the last two months, the results by participant have varied by a great degree, with some posting some reasonable gains, but the majority reporting declining order rates, which will lead to declining shipments in some of the coming months," he said. "With that said, there does seem to be some good news on the horizon. Most reports of holiday retail sales have been good. In spite of the really rough weather in the last two weeks, it appears that a good deal of consumer spending is starting to occur.

"While unemployment remains high and certainly a concern, for the most part, consumers are no longer worried about a double dip recession as the economy seems to be gaining some strength. Job losses have subsided overall. The stock market has returned to mostly 2008 levels. The tax cut extensions finally came through. So at least consumers do not feel the need to hunker down as much as they did even a few months ago. In addition, consumers have been reducing debt and saving more."