Furniture Insights: October Furniture Orders Up 6%

December 30, 2012  by in UnCategorized   

By Home Furnishings Business in economic news on December 31, 2012

Retail orders for furniture rose 6 percent in October compared with the same month last year, according to the latest Furniture Insights report.

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

"Approximately 75 percent of our participants reported increased orders in October," said Smith Leonard Managing Partner Ken Smith in the report. "This was one of the highest percentages in quite some time. The timing of the High Point Market could have had some impact in that it was earlier in October than it was in 2011."

Through October, year-to-date new orders 5 percent ahead of levels at the same point last year; and about 72 percent of the participants have now reported increased orders for the year, up from 65 percent last month.

"Again, as with the month, this was the highest percentage in quite some time on a year-to-date basis," Smith said.

October shipments rose 5 percent from October 2011 and were even with September 2012. Year-to-date, shipments remained 7 percent ahead of the same period a year ago. October backlogs increased 15 percent over the same month last year; and up from a 13 percent increase for September. With orders in dollars up over shipments, backlogs increased 3 percent from September levels.
 
Receivables rose 6 percent higher from October 2011 but fell 1 percent from September levels, in line with the 5 percent increase in shipments over last year and the flat September to October shipments comparison.
 
Inventories increased 8 percent compared with October 2011, up from a 4 percent September increase; and were 6 percent higher than September.

"One month does not tell the story, so we will watch to see what happens with inventories over the next month or so," Smith said.
 
Factory and warehouse employment rose 4 percent over October 2011, the same increase reported for September; and was flat when comparing October to September. Factory and warehouse payrolls were flat compared with October a year ago' and down 3 percent from September. Payrolls were up 5 percent year-to-date, down from 6 percent reported last month.

In summary, Smith noted another positive report for the residential furniture industry.
 
"Orders may have been slightly impacted by High Point Market dates as Market was a week earlier this year, though we doubt there would be that much impact," he said. "One participant laughingly told me some time around Thanksgiving that he was still waiting on his Market orders."
 
Unfortunately, the looming "fiscal cliff" is having a negative effect on consumer confidence reports from the Conference Board and the University of Michigan.

"I like the comments made by Richard Curtin from the Michigan Study where he noted that 'Confidence is lost much more easily than it can be regained, and the pessimism created by not reaching a resolution before year-end will be difficult to reverse even if a settlement is reached soon after the start of 2013,'" Smith said. "The bad part to all of this is that the housing market has finally shown real signs of life after a long, long weary time. Sales are up, starts are up, prices are moving up, and inventories are down. In fact, sales of existing homes were at the highest level since November 2009. And the inventory of homes for sale is at the lowest level since September of 2005. Even the average days homes are on the market are down quite nicely. This has definitely been needed by the industry. If only we could match this up with confidence, things would be so much better.
 
"By the time you read this, it is likely that we will have averted the cliff or we will be falling as we speak. Who knows what the bottom brings if we do fall. Hopefully it will be averted and we can all breathe a sigh of relief, though whatever they come up with will likely not be a long-term solution."