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From Home Furnishing Business
Smith Leonard Report on Economic Outlook in Furniture
October 2,
2023 by HFBusiness Staff in Business Strategy, Industry 
Our latest survey showed that new orders in July 2023 were up 28% over July 2022, but once again we have to look deeper to understand what that means. July 2022 new orders were down 37% from July 2021 when they were down 11% from July 2020. But July 2020 orders were way up.
Follow that? As we have said, comparisons today are difficult. Just read the quarterly reports from the public companies and then compare their results back for the same periods to the last few years.
Year to date, new orders were down 4% from last year when they were down 29% from 2021. For July 2023, new orders year to date were down for 63% of the participants.
Shipments were down 21% in July versus July 2022. See the Highlights section below for the comparisons to previous years. Backlogs continued to return closer to more normal levels, though a few remained higher.
Inventories increased a bit from June levels but were 28% below last July. The number of factory and warehouse employees as well as payrolls continued to drop as would be expected.
Sales on an adjusted basis at furniture and home furnishings stores were down 7.2% from August 2022. On an unadjusted basis, sales at these stores were down 4.3% year to date.
The Consumer Price Index (CPI-U) rose 0.6% in August after increasing 0.2% in July. Over the last 12 months, the all-items index increased 3.7% before seasonal adjustment. The all items less food and energy index rose 4.3% over the last 12 months. The energy index decreased 3.6% for the 12 months ending August, and the food index increased 4.3% over the last year.
Smith Leonard share some parting thoughts on what the report means. If we forget the difficulty in comparisons, it appears that business overall has slowed for most all producers and distributors. While the lower end has been slower due to the continued pressure of overall cost of living increases, the higher end seems to also be affected lately.
With the overall economy slowing down, the political rhetoric from the Presidential race as well as others, and overall consumer confidence falling, there is little wonder that business overall would be hurting.
The signs of a recession continue to seem like we are heading into one in spite of thinking a couple of months ago that we might dodge one. In fact, one might think that we are probably there now.
There is so much negativity in the news, much of it deserved lately, that it is hard to make yourself feel like spending much money until some of this is sorted out, no matter what income level you have. The stock markets seem to lead us to that belief as well.
Some comments we have heard from a few in the retail sector is that the fourth quarter may be a little better and 2024 may be more normal, but we are wondering if that might be a bit optimistic.
We do think that later on in 2024, we may return to more normal levels of the economy, but remember, it has always appeared that furniture business has felt the pinch early and is sometimes the last to come out of slow periods, if for no other reason than it being a more deferrable purchase than most durable goods.