Furniture Orders Fall in November

January 27, 2011  by in UnCategorized   

By Home Furnishings Business in economic news on January 28, 2011

New orders from furniture retailers fell 5 percent in November 2010 compared to the same month the prior year, according to the latest Furniture Insights survey.

High Point accounting and consulting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors.

New orders were up 3 percent from October 2010. Year-to-date, new orders were up 4 percent for the eleven months, down from a 5 percent increase through October. Smith Leonard Managing Partner Ken Smith noted that new orders in November 2009 were 10 percent higher than November 2008, and that the third consecutive year-to-year monthly decline in orders was not unexpected.

"As we noted last month, based on our conversations, the fourth quarter of 2010 clearly slowed from the momentum that was built in late 2009 and early 2010," he said.

Shipments in November were flat compared with November 2009 and up 1 percent over October. Shipments in November 2009 were down 1 percent compared to November 2008. Year-to-date, shipments were up 7 percent for the eleven months over the same period a year ago. The first eleven months of 2009 were down 17 percent from the same period in 2008. For the year-to-date, shipments were up for 79 percent of the participants, up slightly from last month.

With orders exceeding shipments for the month, backlogs increased slightly, up 3 percent. Backlogs are now 2 percent lower than they were in November 2009.
 
Receivable levels rose 6 percent over November 2009, more in line with the year-to-date shipment levels, though still a bit high relative to the last two month's shipments comparisons.

"But they were 9 percent higher in October versus October 2009, so the trend is moving in the right direction," Smith said.

Inventories were 18 percent higher than November a year ago, down slightly from a 19 percent increase reported last month. Inventories were down 3 percent from October, an indication vendors are getting inventories in line with current business conditions.
 
Factory and warehouse employment fell 1 percent from November 2009 and 1 percent lower than the prior month as vendors adjusted to slower fourth-quarter business.

"November 2009 orders were up 10 percent over 2008 so we were going up against pretty strong results from last year," Smith said in summary. "Nevertheless, it does seem that the fourth quarter seemed to stall some of the momentum we had gained earlier in the year. "

Smith noted the recent decline in orders would negatively affect first-quarter 2011 shipments, but that both orders and shipments for the 11 months were on the positive side after three years of declining orders and shipments (with 2008 and 2009 reporting double digit declines).

Despite continued high unemployment, Smith said positives include improving consumer confidence spurred by significant improvement in the stock market, a sense that government spending will get under control, stabilizing unemployment and real improvement in the economy, if not in furniture sales.

"When some of this improvement in confidence converts to more furniture sales, we are not sure," Smith said. "But we do expect 2011 to be a more kinder and gentler year than the last four years have been."