Furniture Insights: December Orders off 7%

March 3, 2013  by in UnCategorized   

By Home Furnishings Business in economic news on March 4, 2013

December orders for furniture fell 7 percent compared with December 2011, 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 58 percent of survey participants reported a decline in orders, some fairly severe. For the year 2012, new orders were up 4 percent over 2011, down from 5 percent reported last month.

Approximately 67 percent of the participants reported an increase in orders for the year with a fair number of participants only off 1 to 3 percent.

December shipments in 2012 fell 1 percent from shipments in December 2011 but were up 5 percent from November. For the year, shipments were up 6 percent over 2011. Approximately 67 percent of the participants reported increased shipments for the year, up slightly from last month.
 
With shipments exceeding new orders, backlogs fell 8 percent from November levels but remained 5 percent ahead of December 2011. November backlogs were 8 percent higher than November 2011.
 
Receivables rose 4 percent from November as shipments in December were 5 percent ahead of November; and were up 4 percent from December 2011.

"This increase seems in line considering the increase in shipments year-to-date of 6 percent, even though shipments fell 1 percent from December 2011," said Smith Leonard Managing Partner Ken Smith in the report.
 
December inventories dropped 1 percent from November and were 8 percent higher than December 2011.

"The 8 percent increase seems a bit high based on orders and shipment levels, but are up probably as a result of better business in the fall months, causing higher inventory levels," Smith said. "Then business fell off a bit so inventories were a bit high. Hopefully they will work their way down soon."
 
Factory and warehouse employment remained level with November levels and was up 3 percent from December 2011, down from a 4 percent increase reported for November to November comparisons.
 
Factory and warehouse payrolls fell 1 percent from December 2011, in line with lower business levels. For 2012, factory and warehouse payrolls rose 4 percent from 2011 levels, in line with business levels for the year.

"It has been an interesting year with some good growth at times followed by slower times," Smith said in summary, noting that the December-to-December decrease this year was not unexpected. "But December 2011 new orders were up 15 percent over December 2010, so the 7 percent decline, while not something we wanted, was not as bad as it might seem. €¦ So the good news is that, as a whole, we continue to move in the right direction."

Smith noted that in spite of the fiscal cliff and other bad news from all sorts of media coverage, consumer confidence improved significantly in February.

"In addition, housing continued its upward trends, with housing shortages becoming a bit of a problem in certain areas, keeping sales growth lower than it might be," Smith said. "As this continues to improve, most homeowners can now feel a bit more secure that at least one of their major assets is not declining in value but instead may actually be gaining value again."
 
He also noted that it appears consumers might be getting so used to hearing bad news that they're adjusting.
 
"The employment picture seems to be somewhat stable though not growing as much as needed," Smith said. "We hope the sequestration (if it continues) cuts are sensible and not grand standing for the sake of show," Smith said. "Consumer prices other than gas, etc. seem in control. And interest rates remain extremely favorable to the consumer (though not so great for investors). So at least with some of the negatives, we still have some positives. We just could use a little more hype of those things from our media.
 
"Clearly all retailers, manufacturers and distributors are not growing, but at least according to the national reports and our surveys, a significant portion are. According to our report, we are still down about 20 percent from 2006 levels, but each year lately, we have gained a bit. Let's hope the bad weather across the country ends soon, springtime comes and consumers come back out."