October Orders up 11%

January 2, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on January 3, 2012

New orders from furniture retailers rose 11 percent in October 2011 compared with the same month in '10, 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. While the 11 percent increase was good, it compared with poor performance in October 2010, when orders were down 5 percent from October 2009. The 2011 order rate still was 6 percent higher than October 2009.

New orders were 5 percent lower than September 2011 orders.

Through October, new orders for 2011 are up 7 percent, up from a 6 percent increase through September. Through October 2010, new orders were up 5 percent over the first ten months of 2009.
 
October shipments rose 6 percent over October 2010, when they were 3 percent above October 2009, but fell 6 percent from September levels. Year-to-date, shipments were 3 percent ahead of 2010, when they were 8 percent ahead of the first ten months of 2009.

Backlogs were up 16 percent over October 2010 as orders exceeded shipments again (up from an increase of 13 percent reported last month).

Despite increased shipments compared with last October, receivable levels fell 1 percent from October 2010. Receivables were even with September levels though shipments were down 6 percent from September.

"Overall though receivables have seemed to be in pretty good shape, though from month to month, there can be timing issues," Smith Leonard Managing Director Ken Smith said in the survey report. "Inventories were up 1 percent from September, making them 3 percent higher than last year at this time. With orders up pretty nicely, the increase in inventories seems reasonable."
 
Factory and warehouse employment was even with September levels and up 1 percent from October 2010. September employment fell 1 percent from last September. Factory and warehouse payrolls, on the other hand, rose 10 percent over October 2010.

"It appears that employees were getting more hours this year than last," Smith said. "Last year at this time, we had begun to see business slowing down again, so we suspect hours were cut in many cases. We have also heard about some minor increases in wages per hour after several years of either flat or cut pay rates."

In summary, Smith said October results were positive overall.

"The 11 percent increase in orders versus October 2010 was a bit affected by the decline in orders reported last year of 5 percent versus 2009," he said. "Still, the October levels were almost 6 percent higher than 2009."

Smith noted that High Point Market dates typically have some impact on monthly order statistics, and that the 2011 fall market was a week later than 2010.

"That would typically mean that many market orders were not written until November," he said. "But as we have noted before, we heard much more about order writing at market than we have heard in a long time. So we may not see the lag in order writing that we have seen at some recent markets.

"Still, year-to-date orders are up 7 percent over the first ten months of 2010. This compares to a 5 percent increase reported for the year-to-date last year. We have mentioned before that some of the increase probably reflects price increases put in over late spring and summer. And some could be reflective of ordering before price increases. Yet, the increase in October was the 7 of the last 8 months where orders were up over the same month a year ago (May orders were flat). We believe this is a good trend."

He added that some national reports are encouraging.

"Consumer confidence has continued to inch up in spite of the negative political news we hear every day, along with the bad news we hear about the U.S. economy and the economic troubles around the world," he said. "Housing is also starting to show promise. While prices are still down, sales and construction is improving. According to the NAR, if the tightness in lending would ease somewhat, we would see even more improvement.

"Jobs are still a major issue, but if we can see housing construction continue to improve, the job market would be helped tremendously. We guess it really all depends on what news you read or hear about on a daily basis. But we do feel that the furniture industry as a whole is improving, admittedly slower than we would like."