Furniture Insights: New Furniture Orders up in Jan.

March 28, 2013  by in UnCategorized   

By Home Furnishings Business in economic news on March 29, 2013

Retailers ordered 7 percent more furniture in January 2013 than January 2012, according to the latest Furniture Insights report.

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

The January increase in orders came on top of a strong January in 2012, when new orders were 13 percent higher than January 2011.

"Some 65 percent of our participants reported increased orders for January 2013 with several reporting double digit increases," said Smith Leonard Managing Partner Ken Smith. "In addition, we had fewer participants reporting double digit declines in order levels, so overall it appears we were off to a good start for 2013 based on January results."

January 2013 shipments were also very good compared to January 2012, increasing 10 percent over last year.

"In January 2012, shipments were 8 percent higher than January 2011, so as with orders, the increased percentage was good compared to a nice increase reported the year before," Smith said.
 
Backlogs rose 2 percent from December as new orders in dollars exceeded shipments in January. Backlogs were about equal to backlogs in January 2012.
 
Receivables rose 8 percent from January 2013 compared to January 2012, in line with a 10 percent increase in shipments. Receivables fell 3 percent from December 2012 levels, but shipments were down 5 percent in January from December, so overall receivable levels appear to be in pretty good shape.
 
Inventories rose 5 percent from December 2012 levels and were 9 percent higher than January 2012. December 2012 inventories were 8 percent higher than December 2011.

"In December, we thought inventories were getting a bit high," Smith said. "Even with increased orders and shipments, we still believe inventory levels need watching.
 
Factory and warehouse employment rose 1 percent from December and 3 percent from January 2012, in line with a December-over-December increase of 3 percent.
 
Payrolls rose 5 percent from January 2012, again in line with increases in shipments and orders.

"The results of our latest survey were promising especially considering the results in November and December of 2012," Smith said in summary. "After two consecutive months of declining orders (although those results were not too bad considering factors we discussed before), new orders in January 2013 were up 7 percent over January 2012. January 2012 orders were 13 percent higher than January 2011 so the January 2013 comparisons were pretty strong.

"If there is any negative news to report this month, it is that based on our conversations, the positive results for January have not continued through February and March. We have been asked quite often what we are hearing, and what we are hearing is pretty much all over the place, depending on what day you ask the question."

Smith noted that "crazy weather" across much of the country should make a slowdown in furniture sales no big surprise.

"Some of the storms have been very severe especially in parts east of the Mississippi, where so much business is done, especially in the Northeast," he said. "The Midwest has not faired much better. All of this has to have had a negative effect on sales at retail.

"That said, housing continues to give confidence as it continues to rebound at a pace that probably exceeded our expectations. While that could concern some that housing is moving too fast, it is likely more pent up demand that is causing the fast recovery. The good news is banks are still making sensible mortgage loans so we should not be concerned with another 'bubble,' at least at this point. Even if confidence hurts us a bit, eventually the growth in housing has got to be good for the industry. The industry may have to adapt a bit as we understand that the size of new homes is declining, but that just creates opportunity for the industry."