Smith Leonard  Share Insights with Industry Newsletter for June

July 2, 2023  by HFBusiness Staff in Business Strategy, Industry   

The contraction of business continued in April, despite having the April market. We realize that it generally takes a while for market orders to come through. Hopefully we may see some pick up in the May results.

New orders fell 19% in the April-to-April comparison and dropped 16% from March 2023. Orders fell for 84% of the participants. Year to date, orders were also down 19% with over 80% of the participants reporting a decline in new orders.

Shipments also continued to fall as shipments were down 28% for the month compared to April 2022 and were down 14% year to date.

For the month, shipments dropped for 88% of the participants while the year-to-date decline was for only 60% of the participants.

With shipment dollars exceeding new order dollars, backlogs fell 8% from March and were down 64% from last April, when they were still at extremely high levels.

Receivable levels seem in line with the monthly shipments, declining 31% and inventories were 12% below last year after a 5% decline in March.

It will take some time to determine what inventory levels need to be, due to the decline in business plus how much “protection” is needed in the future due to supply shortages.

The number of factory and warehouse employees fell again.

We continue to believe attrition is taking care of some of the decline as well as underperformers, but business needs to pick up soon to avoid more serious cuts.

A DEEPER DIVE – NATIONAL

Consumer Confidence Highlights
Present Situation
Consumers’ assessment of current business conditions improved marginally in June. 
~ 23.7% of consumers said business conditions were “good,” up from 19.7% last month
~ 16.3% said business conditions were “bad,” down from 16.7% 
Consumers’ appraisal of the labor market deteriorated.
~  46.8% of consumers said jobs were “plentiful,” up from 43.3%
~  12.4% of consumers said jobs were “hard to get,” slightly lower than 12.6% last month

Expectations Six Months Hence
Consumers remained pessimistic about the short-term business conditions outlook in June.
~ 14.2% of consumers expect business conditions to improve, up from 13.2%
~ Meanwhile, 17.7% expect business conditions to worsen, down from 21.4%  
Consumers’ assessment about the short-term labor market outlook was slightly more favorable.
~ 15.5% of consumers expect more jobs to be available, up from 13.8%
~ Moreover, 16.0% anticipate fewer jobs, down from 21.1% 
Consumers’ short-term income prospects worsened in June.
~ 16.9% of consumers expect their incomes to increase, down from 18.9% last month
~ 11.9% expect their incomes will decrease, up from 11.4% in May