Smith Leonard Releases Furniture Insights for December ’24

January 2, 2025  by Karen Parrish in Business Strategy, Industry   

EXECUTIVE SUMMARY
New orders were essentially flat in October 2024 compared to October 2023, which puts an end to 5 straight months of year over year declines we saw in May – September. However, new orders were down 2% compared to the prior month of September 2024. Year to date through October 2024, new orders remain flat compared to 2023.

October 2024 shipments were down 5% from October 2023, but up 4% from September 2024.

October 2024 backlogs were down 8% compared to October 2023, and also down 2% from September 2024.

Inventories and employee/payroll levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations. 

Consumer Confidence
The Conference Board Consumer Confidence Index® declined by 8.1 points in December to 104.7 (1985=100).

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell 1.2 points to 140.2.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—tumbled 12.6 points to 81.1, just above the threshold of 80 that usually signals a recession ahead.

“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board.

“While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”

On a six-month moving average basis, purchasing plans for homes were down slightly in December, potentially reflecting rising mortgage rates despite Fed rate cuts. Purchasing plans for autos continued to increase, and more consumers planned to buy big-ticket items over the next 6 months than not. However, consumer buying plans for most appliances and electronics were still down on a 6-month moving average basis.

OTHER
Real gross domestic product (GDP) increased at an annual rate of 3.1% in the third quarter of 2024, according to the “third” estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.0%.

The increase in real GDP primarily reflected increases in consumer spending, exports, nonresidential fixed investment, and federal government spending. Imports increased.

Sales at furniture and home furnishings stores were essentially flat in November 2024 from October 2024 on a seasonally-adjusted basis, but up 0.1% from November 2023. Sales were down 3.3% for year to date November 2024 compared to the same period for 2023 on an unadjusted basis.

Thoughts FROM ASSURANCE PARTNER, MARK LAFERRIER
I hope everyone has had a restful and enjoyable holiday break.

We continued to see many of the national economic indicators trending in the right direction this month, particularly an increase in existing-home sales, and industry reports about last month’s Black Friday and other holiday retail sales activity have been largely positive. In addition, inflation has slowed enough to allow the Fed to make another 0.25% interest rate cut in December.

Meanwhile, the impact of potential tariffs and labor restrictions has many developing contingency plans and evaluating their options, while simultaneously monitoring the looming East/Gulf Coast port strike and what effect that will have on logistics and already rising container costs.

Despite these challenges, recent reports project modest growth for the coming year with many in the industry relatively optimistic about the prospects for 2025 and beyond.

After several months of year over year new order declines, our monthly stats do seem to suggest that the collective tide may be turning, so like many others, we are hopeful there is enough lasting positive momentum to outweigh the potential negatives, and that with a little luck and a lot of hard work, those that “survived until 2025” will be rewarded for their efforts.

Wishing everyone the best in the new year.