From Home Furnishing Business
December Furniture Orders up 5 percent
High Point accounting and consulting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors.
While year-over-year orders rose, the survey report noted that new orders in December 2012 were down 7 percent from December 2011 so December 2013 orders were actually down from 2011 levels.
For all of 2013, new orders rose 6 percent over 2012, when new orders were 4 percent higher than 2011. Approximately 76 percent of survey participants reported increased orders for 2013, compared with approximately 67 percent of the participants reporting increased orders in 2012.
According to the survey, 2013 orders in dollars were approximately 10 percent lower than 2006, the year before orders began to drop significantly.
December 2013 shipments were 4 percent higher than December 2012; and for the year 2013, shipments were rose 5 percent over 2012. Backlogs were down 8 percent in December from November levels as shipments exceeded new orders, but were 14 percent higher than they were in December 2012.
December inventory levels rose 5 percent from December 2012, in line with the increase in shipments for the year. December receivables fell 4 percent from November, due to a 2 percent drop in shipments and timing of year-end payments. Inventories in December rose 3 percent over December 2012, the same as was reported last month.
"A 3 percent increase is very much in line with current conditions so it looks like inventories are in very good shape," said Smith Leonard Managing Partner Ken Smith in the report.
Factory and warehouse employment stayed roughly even in December compared with November; and rose 4 percent from December 2012. Factory and warehouse payrolls were up 1 percent from November; and were 6 percent ahead of December 2012 down from 15 percent increase reported last month. For the year, factory and warehouse payrolls were up 9 percent over 2012. In 2012, factory and warehouse payrolls were 4 percent higher than 2011.
"Overall, the results for the month and year were pretty much in line with recent business conditions for most," Smith said in summary. "We continue to have a fairly wide disparity from some growing at nice double digits versus declining in double digits as well.
"According to our surveys, 2013 orders in dollars were approximately 10 percent lower than the year 2006. Since we do not attempt to track pieces (never figured how to), we do not know how much of the decline is in product moved or how much is related to lower priced goods. But whatever the cause, it has clearly been a tough seven or so years."
He added that the good news is that individually many companies have come back to 2006 and earlier year's top lines, with some even having record years.
"Obviously, this means that we have lost some companies to either bankruptcy or to just closing down," Smith said. "We have also seen many companies return to stronger profitability during these times through various belt tightening measures. Good times usually create some fat in organizations so the decline in business helped rid some of the fat and inefficiencies."
Smith noted that severe weather has dampened the start of 2014; and has also slowed down housing activity.
"Some of the slowness has been attributed to higher mortgages, tighter credit and higher prices, but we believe weather has been a major factor," Smith noted on the housing market. "Consumer Confidence declined slightly in February and we expect the GDP to drop for first quarter, again due mostly to weather related issues. But current conditions confidence remains steady, which is a good thing.
"Overall, when you step back and discount things like the weather, there is no real reason to think 2014 should not show more good progress. The stock market has moved around a bit but most financial market gurus have warned that we are due for some choppy markets."
Smith pointed out that home prices are within reason; and interest rates remain a bargain.
"Commercial borrowing rates for business are still very good," he added. "Inflation seems under control except for swings in energy prices, which consumers seem to be somewhat used, even though very tough on some. It appears the Affordable Care Act is going to take a while to see what real impact there will be since parts and pieces keep getting delayed."