From Home Furnishing Business
July Furniture Orders Jump 13%
Year-to-date, new orders were up 6 percent through July (new orders were up 4 percent year-to-date in July 2012 over July 2011). Around 78 percent of the participants are now reporting increased orders year-to-date, up from 76 percent reported last month and 67 percent in May.
High Point accounting and consulting firm Smith Leonard performs the monthly survey of residential furniture manufacturers and distributors.
July shipments rose 9 percent compared with July 2012 but fell 20 percent from June.
"The June to July decrease is normal due to the shutdowns for the week of the 4th that most companies take," wrote Smith Leonard Managing Partner Ken Smith in the survey report. "This increase followed an 8 percent increase reported last month in comparing June over June 2012."
Year-to-date, shipments rose 4 percent compared with the same period a year ago. Last year at this time, shipments were 8 percent higher than the year before.
Backlogs rose 12 percent over July a year ago, up from a 10 percent increase reported last month.
"With backlogs up, we should expect shipments to continue to rise over the next several months," Smith noted.
Receivable levels rose 6 percent over last July, a bit higher than the year-to-date shipments increase of 4 percent.
"But considering the 9 percent increase for the month's shipments, these levels appear to be in line," Smith said. "Inventories, while up 3 percent from June levels, were flat compared to July 2012. Most likely the increase from June was the planning for the week of the (July) 4 shutdown."
Factory and warehouse payrolls fell 12 percent in July from June levels, probably due to vacation time. Payrolls were up 24 percent from July a year ago.
"We think that was probably timing of payrolls in the month," Smith said. "Year-to-date, factory and warehouse payrolls were up 6 percent over the same period last year, pretty much in line with shipment and order rates."
Factory and warehouse employment rose 2 percent in July from a year ago and was up 1 percent from June.
"With payrolls up 6 percent and employee only up 2 percent, it appears that maybe the employees are getting more hours," Smith said.
In summary, Smith pointed out that July was the fourth month in a row that orders were up good solid percentages, bringing year-to-date orders to a 6 percent increase over last year's first seven months.
"Overall, we continue to hear that business continues to improve, maybe not at levels we would like, but still improving," Smith said. "While consumer confidence slipped a bit, the economic indicators still look good for the near future.
"Housing continues to improve both in sales and values. We should pay attention to the housing numbers by region of the country. Depending on which regions you are selling to both at retail and wholesale, housing is not the same all across the country. Focusing on some of the faster growing regions, may pay off in the coming months."
The big worry, as usual, appears to be what happens Washington, D.C.
"The potential of a government shutdown does not seem like a good thing," Smith said. "Somehow we wish we could get back to a more reasonable level of doing what is right for the country versus what is right for a political party.
"Let's hope we can avoid losing the ground we have gained in the last couple of years. Most businesses have now settled into models that are sustainable, if we can keep the bottom from dropping out of sales."