July Furniture Orders up 8%

September 29, 2011  by in UnCategorized   

By Home Furnishings Business in economic news on September 30, 2011

Retailers placed 8 percent more new orders for furniture in July 2011 than the same month last 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. Orders were 8 percent lower than June 2011 orders, but that decline is normal. Year-to-date, new orders are 5 percent ahead of 2010. Through July 2010, orders were up 9 percent over 2009
results.

"We are not able to track units, since we have never been able to determine what units should be measured, so we think that some of the increase reported is attributable to price increases," Smith Leonard Managing Partner Ken Smith said in the survey report. "What we heard over the spring and summer months was that many were putting in price increases this summer, mostly in the 3 to 5 percent range, so some of our increase in orders likely relates to these increases."

July 2011 shipments fell 1 percent from the same month last year.

"Some of this could be timing as July 2010 shipments were 15 percent higher than July 2009." Smith said. "Shipments in July 2011 were 19 percent lower than June 2011, a somewhat normal result due to most companies taking off the week of July 4, with very little shipping that week."
 
Year-to-date, shipments are 3 percent ahead of 2010. Backlogs increased 4 percent over last year and were up slightly over June, likely affected by some import orders not being shipped as quickly as orders are taken.
 
July receivable levels fell 2 percent from last year, in line with the 1 percent reduction in shipments.

"Interestingly they were only down 2 percent from June in spite of the 19 percent decline in shipments," Smith wrote. "But for some reason, this seems to happen each year. Most likely this is due to little billing the week of (July 4), causing payments to be delayed to August."

Inventories rose 3 percent in July from June and were 5 percent higher than July 2010, which appears in line with the increase in orders. 

The number of factory and warehouse employees rose 1 percent from June levels, but fell 1 percent from July 2010. Last year at this time, employment was up 3 percent over July 2009. July 2011 factory and warehouse payrolls fell 3 percent lower than July 2010, when they were 17 percent higher than July 2009. Payrolls were down 23 percent from June, due primarily to the July 4 shutdown.

In summary, Smith reiterated that the year-over-year order increase in July related largely to price increases.

Consumer confidence remained a drag on performance in September.

"News from Washington continues to depress most all of us and the global news is not much better, or even worse," Smith noted. "Add to that the recent wild swings in the stock market and there is no wonder consumers do not have confidence.

"One bright spot has been the recent decline in gas prices, but that has not held in the past, so we doubt consumers are confident such prices will stick."

Negative rhetoric surrounding the presidential election won't help consumer attitudes, either, he noted, but Smith did see some brighter spots.

"Housing on the other hand seems to be bouncing along," he said. "Weather has had some impact, but the overall market seems somewhat improved. Even though houses are being sold at lower prices, they will still need furniture over the months following a purchase. So all is not bleak.

"The other good news for the industry is that, while a 5 percent year-to-date increase in orders over last year is not what everyone needs, it is at least comparing to pretty good results last year when we were up 9 percent over year-to-date 2009. So while business is tough, in light of the poor performance of the economy in general, moving forward is a good thing."