BDO: May Orders, Shipments Up Over April, Flat Compared to ‘05

August 3, 2006  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on August 2006 While factory orders for residential furniture rose 18 percent in May from April to $2.3 billion, they were essentially flat compared to May 2005, according to BDO Seidman’s monthly report on furniture industry activity.

Those year-to-year results are somewhat disappointing, since it was hoped that a late High Point market had contributed to a 13 percent drop in orders comparing April 2006 numbers to April 2005.

Year-to-date, new orders are now just slightly ahead of last year for the first five months.

Just over one-half of survey participants reported increased orders in May compared to May 2005. Year-to-date, only 32 percent of the participants have reported increased orders, but a good number of the participants are about even with last year.

May 2006 shipments of $2.3 billion rose 1 percent over last May and 6 percent over April. Year-to-date, shipments are basically even with the first five months of last year.

Some 54 percent of the participants reported increased shipments in May over last May. Year-to-date, 45 percent of the participants have reported increased shipments. As we have noted before, there are a number of participants reporting fairly strong double-digit improvements, but there are also a number that are off in double digits.

Backlogs in May, $1.8 billion were about even with April as shipments and orders were about even in dollars. Backlogs fell slightly from May 2005.

Receivables were about even with last May levels, reflective of shipments for the month in both years, as well as the year-to-date levels. There have been a couple of bankruptcies this year, but none of the magnitude of some in prior years.

Inventories were 2 percent lower than last May, but up 1 percent over April.

Furniture factory employment fell 5 percent from last May, and were about even with April levels. Factory payrolls were down 8 percent from last May and down 2 percent from April, again reflecting slower business at retail. Year-to-date, factory payrolls were down 7 percent, consistent with April results.

Employment and payrolls continue to post year-over-year declines. For example, May 2006 employment was down 5 percent compared to May 2005. May 2005 employment was down 6 percent from May 2004. It appears that the employment declines have not leveled off.

Favorable economic indicators for furniture in May include an uptick in consumer confidence, consumer prices, consumer debt, housing starts and sales of existing homes, and producer prices.

Unfavorable indicators include interest rates, consumer spending, retail sales, unemployment, durable goods orders, factory shipments, new home sales, automobile sales and capital outlays.