Smith Leonard Reports March Furniture Insights

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

New orders were down 3% in January 2025 compared to January 2024. However, new orders were up 2% compared to the prior month of December 2024, which would seem to include some seasonality due to the December holiday break.

January 2025 shipments were up 4% compared to January 2024, and also up 8% compared to December 2024. Backlogs were down 5% compared to January 2024, and also down 4% from December 2024 as current shipments outpaced new orders during the last month.

Receivable levels were up 6% from December 2024, but flat with January 2024, both of which are materially in line with the respective shipment trends.

Inventories and employee/payroll levels are again materially in line with recent months (factoring in the holiday breaks), but down from 2024, indicating that companies have aligned levels to match current operations.

Inventories and employee/payroll levels are again materially in line with recent months (though December payroll was down from November due to holidays), but down from 2023, indicating that companies have aligned levels to match current operations.

The Conference Board Consumer Confidence Index® fell by 7.2 points in March to 92.9 (1985=100)

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased  3.6 points to 134.5.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—dropped 9.6 points to 65.2, the lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead.

“Consumer confidence declined for a fourth consecutive month in March, falling below the relatively narrow range that had prevailed since 2022,” said Stephanie Guichard, senior economist, Global Indicators at The Conference Board.

“Of the Index’s five components, only consumers’ assessment of present labor market conditions improved, albeit slightly. Views of current business conditions weakened to close to neutral. Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low. Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”

On a six-month moving average basis, purchasing plans for homes and cars declined. Surprisingly, given the anxiety about the future, intentions to buy big-ticket items—including appliances and electronics— ticked up, which may reflect plans to buy before impending tariffs lead to price increases. Consumers’ overall intentions to purchase additional services in the months ahead were little changed, but their priorities shifted. Fewer consumers planned to spend more on movies and live entertainment or sports, and more planned to spend on outdoor activities and travel. Vacation plans also increased.

Real gross domestic product (GDP) increased at an annual rate of 2.4% in the fourth quarter of 2024 (October, November, and December), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1%.

Real GDP increased 2.8% in 2024 (from the 2023 annual level to the 2024 annual level), the same as previously estimated. The increase in real GDP in 2024 reflected increases in consumer spending, investment, government spending, and exports. Imports increased. From an industry perspective in 2024, private goods-producing industries increased 3.4%, private services-producing industries increased 2.8%, and government increased 1.9%.

The price index for gross domestic purchases increased 2.4% in 2024, the same as previously estimated. The PCE price index increased 2.5% and the PCE price index excluding food and energy prices increased 2.8%, both the same as previously estimated. Real gross domestic income (GDI) increased 3.0% in 2024, compared with an increase of 1.7% in 2023. Sales at furniture and home furnishings stores were with January 2025 on a seasonally-adjusted basis, but up 5.5% from February 2024. Year to date on a non-adjusted basis, sales were up 3.8%.

Another month, another round of looming tariff activity potentially being announced today, so I’ll stick to what we do know, which is that consumer confidence declined for a fourth consecutive month as concerns grew about labor market conditions and stock market volatility (seemingly hitting consumers in both the low-end and high-end of the market), among other things, which as a leading economic indicator could be a signal of trouble ahead at least until some of the current uncertainty is resolved.

However, with the 2-month reporting lag reflected in our monthly stats, the full impact of these recent trends doesn’t appear to have filtered their way down to our participants’ operations and financial results, so we’re hoping the furniture industry can maintain its recent modest gains against these potential headwinds.

There does seem to be some reason for optimism with recent housing reports, though it would appear the Fed is going to take a wait and see approach to how current policies will impact the overall economy and inflation before implementing any further cuts.

On a lighter note, we look forward to seeing many of you in High Point in a few weeks for what I’m told will be some beautiful Spring weather.

Thoughts FROM MARK LAFERRIERE, ASSURANCE PARTNER SMITH LEONARD

Another month, another round of looming tariff activity potentially being announced today, so I’ll stick to what we do know, which is that consumer confidence declined for a fourth consecutive month as concerns grew about labor market conditions and stock market volatility (seemingly hitting consumers in both the low-end and high-end of the market), among other things, which as a leading economic indicator could be a signal of trouble ahead at least until some of the current uncertainty is resolved.

However, with the 2-month reporting lag reflected in our monthly stats, the full impact of these recent trends doesn’t appear to have filtered their way down to our participants’ operations and financial results, so we’re hoping the furniture industry can maintain its recent modest gains against these potential headwinds.

There does seem to be some reason for optimism with recent housing reports, though it would appear the Fed is going to take a wait and see approach to how current policies will impact the overall economy and inflation before implementing any further cuts.

On a lighter note, we look forward to seeing many of you in High Point in a few weeks for what I’m told will be some beautiful Spring weather.