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From Home Furnishing Business

Furniture Orders up 10 Percent in November

February 3, 2014  by in Economic News, Industry   

High Point accounting and consulting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors. Not only did November's results represent  the eighth consecutive month that new orders exceeded the previous year's monthly comparison, it was also one of the better year-to-year comparisons for 2013.

"The High Point Market was late in October so there was likely some impact of market orders not being placed until November," Smith Leonard Managing Partner Ken Smith said in the survey report. "Yet October orders were 5 percent higher than October the year before. New orders were up for 77 percent of the participants in November, up from 56 percent reported for October and 72 percent for September."

Year-to-date, new orders ran 6 percent higher than 2012. New orders increased year-to-date for 80 percent of survey participants, the same as the prior month.

November shipments were 10 percent higher than November 2012; and were up 7 percent over October results. That follows a 9 percent increase reported for October. Shipments were up for 69 percent of the participants in November, up from 61 percent in October.

Through November, shipments 5 percent ahead of 2012; and around 68 percent of the participants reported increased shipments year-to-date, the same percentage reported in October.
 
Backlogs rose 13 percent from November 2012 2012. Backlogs fell 1 percent from October as shipments slightly exceeded orders.
 
Receivables were up 5 percent from November 2012 levels, in line with year-to-date shipments and compared favorably to monthly shipments.

"These levels were flat with October in spite of the 7 percent increase in shipments," Smith noted.
 
Inventory levels fell 1 percent from October and were 3 percent higher than November 2012.

"The 3 percent increase was the same as reported last month," Smith said. "Overall, inventories appear in really good shape considering current business levels."
 
Factory and warehouse employment was up 3 percent in November 2013, compared with the prior-year month, and remained even with October.

"Factory and warehouse payrolls remained considerably higher than November a year ago, showing a 15 percent increase, the same as reported last month," Smith said. "Year-to-date, these payrolls are 9 percent higher than a year ago. It is somewhat interesting in looking at individual participants as most are either up double digits and more or down."

In summary, Smith said November results, considering Market dates, were in line with expectations.

"We expect December results to continue to be positive but we are concerned with street talk about the beginning of 2014," he said. "Many of the people we have talked with indicate in some people's words, 'somebody cut the faucet off in January.' While that thought is not across the board, we have heard it from enough folks that it causes concern.
 
"We expect that winter weather has been a factor and certainly this past week even weather in the South has affected shopping. For sure, many people just felt lucky to get home. Most of the economic news has remained positive, except of course whether you believe the Affordable Care Act news is positive or negative. The GDP early results look good and consumer confidence is moving in the right direction."
 
Smith added that while percentage gains in housing are troubling, it is hard to continue double digit gains year after year.

"So to be relatively flat at decent levels is not a bad thing," he said. "That is until you graph it back for the last 20 years and remember where the peaks were 10 years ago. Still housing gains has got to help the industry over the next several months.
 
"It's amazing the people are holding back due to higher mortgage rates of 4 plus percent. How quickly some forget or never knew how good 7.5 percent could be. But we also need inventories, especially new homes, to improve."
 
Barring catastrophe, Smith is optimistic for 2014.

"(It) should be a decent year for the industry as we fight the way back to levels of the mid 2000's. With all the deflation we have had, it could be we might be about there with pieces," he said. "Let's hope the somewhat slow start we have heard about in January does not carry over into the rest of the year."