From Home Furnishing Business
Furniture Insights: July Orders up 4 Percent
That came on top of a 5 percent increase in orders for June. High Point accounting and consulting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors.
Year-to-date, new orders are 5 percent ahead of the same period a year ago; and that's comparing with good results at this time last year when orders were 6 percent ahead of 2012 levels.
July shipments were up 11 percent over July 2013, following a 4 percent increase in June.
"Shipments were down 11 percent from June 2014, but a decline from June to July is normal considering many participants shut down for the fourth of July holidays," noted Smith Leonard Managing Partner Ken Smith.
Year-to-date through July, shipments are 6 percent ahead of the same period in 2013.
Backlogs rose 5 percent over last year, down from a 10 percent increase reported last month, a result from the large increase in shipments.
Receivables were up 7 percent over July 2013, in line with the year-to-date increase in shipments of 6 percent and very much in line with the 11 percent increase in shipments for the month compared with last year.
Inventories rose 3 percent over June levels and 9 percent over July 2013.
"This appears a bit high but may be a timing issue," Smith said. "We will need to watch inventory levels next month to see if a trend is developing."
Factory and warehouse employment rose 6 percent over July 2013, in line with expectations.
Factory and warehouse payrolls were 7 percent higher than July 2013, up from 2 percent reported last month, but still in line with current business. Year-to-date, factory and warehouse payrolls were up 6 percent, again in line with the number of employees.
In summary, Smith said that housing continues to improve despite a slight dip of existing home sales in August, which he attributed to a decrease in investor purchases.
"Those purchasers tend not to buy furniture so that does not hurt," Smith noted.
He added that consumer prices remain in line with gas prices decreasing; and that while job creation remains slow, it continues to improve.
"From the sale of furniture products, we continue to move along pretty well on an overall basis," Smith said. "Upholstery continues to outperform case goods, generally speaking."
He noted that consumers are spending more money on the latest and greatest gadgets, the real price of which goes far beyond the initial purchase price.
"Yes, those take a fair amount of money," Smith said. "But think about the monthly costs to run those things. Monthly charges for cell phone usage, data charges, satellite or cable charges, monthly charges for computer or cloud access. The list goes on and on."
All that takes major dollars from consumer pockets.
"There is little doubt that these costs, that were minimal at best 15 years ago, now keep consumers from spending a few extra dollars on furniture and accessories," Smith said. "Many just do not have extra dollars anymore.
"That said, we do seem to be finding some of those dollars and if consumer confidence continues to improve and consumers believe the economy will continue to improve, we should continue to get some share of their dollars. Add to that continued improvement in new and used home sales, the industry should also benefit."