From Home Furnishing Business
October Furniture Shipments up 5 Percent
High Point accounting and consulting firm Smith Leonard conducts the monthly survey of activity among residential furniture manufacturers and distributors. Year-to-date, new orders were up 6 percent over the same period a year ago.
Furniture orders have increased each month since March, when respondents reported a 1 percent decline.
New orders rose for 56 percent of survey participants in October, down from 72 percent in September.
"Some of the October results may be affected by the timing of the High Point Market, since Market was a bit later in October 2013 versus October 2012," said Ken Smith, managing partner at Smith Leonard.
October shipments rose 9 percent from October 2012 levels, following an 11 percent increase reported in September. Shipment also have increased every month since March 2013.
Year-to-date, shipments are up 5 percent over last year, up slightly from September results.
Backlogs rose 1 percent in October over September as the dollar amount of orders exceeded shipments; and 11 percent more than October 2012.
Receivables fell 2 percent from October 2012 despite increased shipments; and were up 4 percent over September 2012.
"The October results likely related to a timing issue as they were up 1 percent over September in spite of a 1 percent decline in shipments," Smith noted.
Inventories rose 3 percent October 2012 levels, down from a 5 percent increase reported for September 2013.
Factory and warehouse employment rose 4 percent over October 2012, up slightly from the 3 percent reported in September. Factory and warehouse employees were 1 percent higher than September 2013. Factory and warehouse payrolls were 15 percent higher than October 2012, up from 13 percent increases reported in September and August; and 8 percent higher year-to-date, the same as reported in September.
In summary, Smith said that October results are positive overall.
"We had thought with Market being a little later this October versus October 2012, we might see some negative impact, but we were pleased with the 5 percent increase in orders," he said. "But new orders were up for 56 percent of the participants, down from 72 percent reported last month."
Most of the economic news continues to be positive. Existing home sales slowed a bit in November but most of that was blamed on low inventories and some mortgage loan issues. In addition, the decline from last year's sales was all in the West where prices were high and inventories were low. Most agree that more new homes need to be built. There are improvements noted in new home sales as well as new houses started.
The revised GDP showed a 4.1 percent increase in the third quarter and leading economic indicators were once again positive. Retail sales were good (not great) overall and were also good at furniture and home furnishings stores, especially in the November to November comparison. Inflation also seems under control as consumer price index results were good.
While new mortgage loan rules helped slow existing home sales in November, Smith believes tighter credit limits could have a positive effect overall.
"As we have said before many times, we think bankers and mortgage institutions limiting the borrowing capacity is a good thing as it should mean borrowers should end up with more disposable income versus spending every dime on mortgage payments," he said. "In other words, more like the old days."
He added that most vendors he talks with believe business continues to improve.
"Some competitors have seen some impact from the changes at Furniture Brands--now Heritage, but overall business we think certainly has come along well in the last couple of years," Smith said. "If we can keep this momentum going, then whenever consumer confidence shakes loose, we should see even more positive results."