Furniture Insights: November Orders Rise

January 31, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on February 1, 2010

After ending a two-year decline in October, new retailer orders for furniture started climbing again in November, up 10 percent over November 2008, according to the latest Furniture Insights survey of furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

Flat results in October had marked the first month since October 2007 where new orders were not lower than the previous year.

The industry still has some catching up to do--November 2008 orders were off 23 percent from November 2007--but it's the second month in a row of now decline.

Fifty-one percent of the participants reported increased orders in November, up from 41 percent in October, 33 percent in September and 20 percent in August.
That is a good trend. Year-to-date, new orders were down 14 percent compared to the same period a year ago, down from 16 percent last month. Last year at this time, new orders were down 13 percent year-to-date.

Shipments in November were off 1 percent compared to November 2008, the first month that shipments were off less than 10 percent since June 2008. Shipments were 4 percent higher than October, but obviously have not yet caught up with the increase in orders. November 2008 shipments were 21 percent lower than November 2007 shipments.

Backlogs were 6 percent higher than October, as orders exceeded shipments. Backlogs were 7 percent higher than November 2008 after a 1 percent increase
last month, following many months of significant declines in backlogs.

Receivable levels were 14 percent lower than November 2008 compared to a 20 percent decline last month.

"We mentioned last month that the 20 percent decline might have related to timing as it appeared a bit out of line," Smith Leonard Managing Partner Ken Smith said in the report. "The 14 percent decline is in line with year-to-date shipments decline of 17 percent."
 
Inventories fell 1 percent from October 2009 and were down 27 percent from November 2008, versus a 26 percent decline last month.

"The decrease in inventories is likely the result of most companies working hard to convert inventories to cash, the decline in volumes, as well as more direct imported products included in sales that never hit inventory," Smith said.
 
Factory and warehouse employment was even with October and down 11 percent from last November. November 2008 employees were down 17 percent from November 2007. Payrolls were down 3 percent compared to last November, when they were down 22 percent compared to November 2008. Year-to-date, payrolls were 18 percent lower than the same period a year ago. Year-to-date payrolls in 2008 were 14 percent lower than the same period in 2007. 
 
In summary, Smith said November results were encouraging for a change.

"While comparing to very weak results from last year, coupled with the October results, we may in fact be reaching the bottom, assuming the economy doesn't hit another snag," he said. Two months do not really create a trend, but it is certainly a start. That along with recent conversations make us at least begin to feel that we may have finally reached bottom."

Smith noted that recent volatility in the stock market is not going to help consumer confidence.

"On the other hand, hopefully some of the craziness coming out of Washington, may begin to slow down a bit and reduce consumers worries about all of the negative news about deficits, crazy spending, etc.," he said. "Hopefully, they are getting the picture that jobs and the economy need fixing more than some other areas of concern. While consumers probably do not feel that good about most news that comes from Washington, hopefully they will not feel worse."