Furniture Insights: July Orders up 4%

September 27, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on September 28, 2012

Furniture retailers ordered 4 percent more furniture in July 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.

The 4 percent July increase followed a 3 percent increase in June. Year-to-date, new orders are 4 percent ahead of the same period a year ago.

"Approximately 66 percent of the participants have reported increased orders year-to-date," said Smith Leonard Managing Partner Ken Smith in the survey report. "It is interesting to note that not all the same participants reported increases for the month and year-to-date. "The results were about what we expected based on recent conversations. We are not expecting much more out of August results.
 
July shipments 2012 were up 3 percent from 2011 following four straight months of 7 percent increases; and off 22 percent from June, which is somewhat normal due to July 4 shutdowns. Year-to-date shipments are up 8 percent, down from 9 percent reported last month.
 
Backlogs rose 2 percent higher from July 2011, down slightly from a 3 percent increase reported last month.

"It appears that backlogs are now reflecting the lower order rates of the last few months," Smith said.
 
July receivables rose 1 percent from the same month last year; and fell 9 percent from June, reflecting the reduction of shipments in July.

"Since July shipments primarily occur in the last two weeks of the month, we would not expect receivable levels to fall as much as shipments," Smith noted. "Compared to last year at this time, receivable levels remain in good shape."
 
Inventories were 11 percent higher than July 2011, up from a 9 percent increase reported last month.

"We hope that some of this may have related to the July 4 holiday week," Smith said. "If not, then it appears that inventories are going in the wrong direction. Inventory levels were up over last year for 69 percent of our participants."
 
Factory and warehouse employment rose 3 percent from July 2011 levels. In June, the number of employees was up 4 percent, in line with current business conditions.
 
Factory and warehouse payrolls were up 4 percent over July 2011 and down 23 percent from June, as would be expected for the holiday week. Year-to-date, factory and warehouse payrolls were up 7 percent, about the same as last month and in line with the increase in shipments.

"Once again, according to our latest survey, the industry did not exceed our expectations in July," Smith said in summary. "New orders were up 4 percent in July compared to July 2011, leaving year-to-date new orders at a 4 percent increase as well. Shipments were up 3 percent in July bringing our year-to-date shipments down to an 8 percent increase.
 
"From what we have gathered, we do not expect the August results to be significantly different than the last few months--really since March if you ignore the spikes and valleys around Market dates."
 
On the plus side, Smith pointed out that consumer confidence improved in September, almost back to February 2012 levels when business was clearly better; and housing continues to show improvement with very nice gains in both existing and home sales and housing starts.

"Reports of shortages in the West and Florida for existing homes seem to indicate that housing is really rebounding," Smith said. "Sooner or later this should drive some furniture sales. And as we have said before, with tighter mortgage restrictions, there should be more disposable income for these homebuyers--assuming they don't spend it all at the Apple stores. Gas prices have been a bother lately, but as hurricane season comes to an end, hopefully the supply lines will all stay in full gear.
 
"Realistically though, not many of the people we talk with are expecting much more than what we have been seeing lately. We think we may see a bit more improvement after all the negative political stuff is gone and we have a clue what we will be dealing with the next four years."