Furniture Orders Rise 8% in August

October 31, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on November 1, 2012

Furniture retailers' August new orders for furniture rose 8 percent compared with August 2012, 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.

Year-to-date, new orders were up 5 percent over last year. In 2011, year-to-date orders were 6 percent higher than the first eight months of 2010. Around 65 percent of the survey participants have reported increased orders year-to-date, compared with 56 percent reporting increased orders at the same point last year. 

August shipments were up 6 percent over August 2011 and 25 percent over July 2012. August 2011 shipments had risen 3 percent compared with July that year.

"Of course, the comparison to July is affected by the normal vacation shut down by most," noted Smith Leonard Managing Partner Ken Smith.
 
Backlogs dropped 2 percent from July as shipments, in dollars, exceeded new orders. Backlogs were 6 percent higher than August 2011, up from a 2 percent increase reported in July.
 
Receivables receivables were even with August 2011 in spite of the increase in shipments, both in the month and year-to-date shipments.

"Overall, we continue to be pleased with receivables' levels," Smith noted.
 
Inventories rose 1 percent from July and were up 9 percent over August 2011.

"Inventories will need to be watched," Smith said. "We know some distributors are carrying more to avoid out of stocks, but with orders up only 5 percent, it's a bit bothersome seeing inventories up 9 percent."
 
Factory and warehouse employment rose 3 percent over August 2011, the same increase as reported in July. Employee levels remained even with July 2012 results.
 
Factory and warehouse payrolls rose 4 percent in August and are now up 7 percent year-to-date, the same as reported last month. Payrolls appear to be in line with current volume levels.

Smith said in summary that the 8 percent increase in orders for August was "a bit surprising."

"But reviewing the results, just over 60 percent of the participants reported increased orders and a good number reported double digit increases," he said. "In addition, a good number of those participants with orders declining were only off a few percentage points €¦ so overall, we are slowly digging out of the hole we have been in."

He said that overall, conversations at October Market indicated it turned out pretty well.

"Yes, attendance appeared to be down some, but those that were here were the major customers of most exhibitors," Smith said. "As one client said to me, 'This is where real furniture business is done' and 'where the real furniture players are.'
 
"We measure the success of Market based on the number of exhibitors who are what we call 'whiners.' And this Market, we had none of those. Yes, some said attendance was off some, but the ones we talked to were pleased with the buyers who were here."
 
He noted that nationally, consumer confidence continues to gradually improve; and that housing, new and existing, continues to improve.

"Prices are generally going up and inventories are down," Smith said. "And per our survey results, these are the two keys to the furniture business."
 
The end of the election season should bode well for the industry.

"Hopefully, no matter who wins, Congress will do the things that need to be done for the country," Smith noted. "At least all the negative ads will be over. This should add to consumers' confidence just by not being bombarded with negative information--true or not.
 
"As we go to print, we are just starting to see all the devastation caused by Sandy. The short term effects of this storm will not be good for an economy that is struggling to keep some momentum. We just hope that we didn't lose too many lives in all of the destruction."