High Point Market Authority Issues Fall Business Outlook

August 12, 2007  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on August 2007 Despite tough business conditions, furniture store sales for 2007 could beat earlier predictions compared with 2006 numbers, based on annualizing slight improvements in this year’s first quarter. That’s according to the Fall Business Outlook from the High Point Market Authority.

The authority compiles it’s twice-a-year forecast through economic data, and consultation with leading retailers who are bucking current trends, manufacturers and industry experts in a variety of fields to explore their strategies for success.

The report noted mixed overall economic indicators for the first half of the year. While the stock market is hitting record highs, home furnishings stocks are lagging.

On the bright side, unemployment sits at a very comfortable 4.5 percent, less than one point above the “full employment” level, and after two months of decline sent it to an April low of 106.3, the Consumer Confidence Index rose to 108.5 in May.

The prime interest rate, though, has held steady at 8.25 percent for the past six

months, a quarter point above its level of this time last year; and a near-4 percent increase in grocery costs since May has combined with high gas prices to make living expenses more daunting for consumers.

Sales of existing homes, perhaps the most critical indicator for the home furnishings industry, dropped another 2.6 percent in April, falling nearly 11 percent off of their April 2006 pace.

Still, the U.S. Department of Commerce reported that furniture store sales were slightly better in the first quarter of 2007 than they were for the same period last year. Averaging the annualized rate for the first three months of this year, indicates a healthy $64.9 billion, representing modest growth over the $61.8 billion average from the first quarter of 2006.

In April, the U.S. Census Bureau reported that “sales of new one-family houses in April 2007 were at a seasonally adjusted annual rate of 981,000... 10.6 percent (±11.8 percent) below the April 2006 estimate of 1,097,000.” Meanwhile, Furniture Digest’s Five Year Residential Furniture Industry Economic Forecast, compiled by Mann, Armistead and Epperson, suggested the industry “should receive some benefit in the second half of 2007 from increased housing activity,” but didn’t foresee “steadily building momentum” until 2008 and have pegged 2009 as the year of “solid recovery” for furniture sales.

For a complete look at the Fall 2007 Furniture Industry Business Outlook, click here .