Sept. Furniture Orders up 10%

December 2, 2012  by in UnCategorized   

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

The latest Furniture Insights report shows new orders for furniture rose 10 percent in September compared with the same month last year.

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

Through 2012's first three quarters, new orders remained up 5 percent over the same period a year ago. Last year at the same point, new orders were up 6 percent over 2010. Smith Leonard Managing Partner Ken Smith said the increase could be a timing issue--while several survey participants reported strong double-digit increases in orders, only 53 percent overall reported increases.

September shipments fell 1 percent from September a year ago.

"Again, we think this was probably also a timing issue" Smith said. "In September 2012, there were only 19 working days compared to 21 a year ago, so that probably impacted the shipping results."
 
Year-to-date, shipments were up 7 percent, down slightly from the 8 percent reported last month. Through September 2011, shipments were up 3 percent over the same period in 2010.
 
With orders exceeding shipments for the month, backlogs rose 9 percent over August. Backlogs in September were 13 percent higher than September 2011.
 
With shipments down 1 percent from September 2011, receivables also fell 1 percent from last September.

"Unfortunately, shipments fell 3 percent from August, yet receivables increased 3 percent from August levels," Smith said. "Since receivable levels have been in line most of the year, we expect that this month's unusual results were a result of timing."
 
Inventories rose 4 percent from last September, much more in line compared to the 9 percent reported last month.

"Inventories actually fell 5 percent from August," Smith said. "So it appears that inventories are being controlled based on current volume levels."
 
Factory and warehouse employment rose 4 percent over September 2011 levels; and was up 1 percent over August 2012; results that also appear in line with current conditions.
 
Factory and warehouse payrolls were flat with September 2011 but up 3 percent over August. Year-to-date, factory and warehouse payrolls are up 6 percent over last year down from a 7 percent increase we reported last month.

"Our latest survey of residential furniture manufacturers and distributors had a few unusual results but we believe some of the results were due to timing," Smith said in summary. "New orders were up 10 percent over September a year ago, but only 53 percent of the participants reported increased orders. But those reporting increases had some significant double digit increases."
 
Due to fewer shipping days in September this year, Smith believes it's best to focus on the year-to-date results. New orders year-to-date were up 5 percent. Through September last year, new orders were up 6 percent so we seem to continue to move upward.

While the elections are finally over, Smith remains concerned over how Congress will avoid a crisis with the "fiscal cliff."

"Surely they will do something," he said. "We think most of us, no matter the party affiliation, are sick and tired of Congress and the way they are acting. Everything seems to have to relate to politics versus what is best for the country (ok-off the soap box).
 
"But all of this is affecting business and consumer spending. Hopefully we will see some sort of reasonable compromise in the next few weeks."
 
He noted that consumer confidence continues to improve, with the Conference Board's Consumer Confidence Index reached its highest point in 4½ years.

"The University of Michigan report also noted their confidence index was at its highest point in five years," Smith said. "So hopefully, if we can get some resolution in Washington, confidence can continue to build.
 
"Housing also is continuing to improve. Home prices are rising giving people a bit more confidence as well. Interest rates are low. And the GDP is showing positive signs. According to the government reports, retail sales at furniture and home furnishings stores were up 8.4 percent for the first 10 months of 2012. Overall, we have some pretty good things to feel good about. Let's hope we can continue to move forward and Congress doesn't do anything stupid to push us back again."