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From Home Furnishing Business

Smith Leonard Provides Furniture Insights for January

New orders were down 9% in November 2024 compared to November 2023, reverting to the negative trend seen in May – September 2024, after a reprieve in October 2024. Year to date through November 2024, new orders are now down 1% compared to 2023. However, new orders were up 5% compared to the prior month of October 2024.

November 2024 shipments were down 1% from November 2023, and flat with October 2024.

November 2024 backlogs were down 10% compared to November 2023, but up 1% from October 2024.

Receivable levels were up 1% from October 2024, but down 4% from November 2023, 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, but down from 2023, indicating that companies have aligned levels to match current operations.

NationaL Consumer Confidence
The Conference Board Consumer Confidence Index® declined by 5.4 points in January to 104.1 (1985=100). December’s reading was revised up by 4.8 points to 109.5 but was still down 3.3 points from the previous month.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell sharply in January, dropping 9.7 points to 134.3.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell 2.6 points to 83.9, but remained above the threshold of 80 that usually signals a recession ahead.

“Consumer confidence has been moving sideways in a relatively stable, narrow range since 2022. January was no exception. The Index weakened for a second straight month, but still remained in that range, even if in the lower part,” said Dana M. Peterson, chief economist at The Conference Board.

“All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline. Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row. Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income. The return of pessimism about future employment prospects seen in December was confirmed in January.”

Real gross domestic product (GDP) increased at an annual rate of 2.3% 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%. The increase in real GDP primarily reflected increases in consumer spending, exports, nonresidential fixed investment, and federal government spending. Imports increased.

Real GDP increased 2.8% in 2024 (from the 2023 annual level to the 2024 annual level), compared with an increase of 2.9% in 2023. The increase in real GDP in 2024 reflected increases in consumer spending, investment, government spending, and exports. Imports increased.

Sales at furniture and home furnishings stores were up 2.3% in December 2024 from November 2024 on a seasonally-adjusted basis, and up 8.4% from December 2023. However, sales were still down 2.2% for year to date December 2024 compared to the same period for 2023 on an unadjusted basis (were down 3.3% YTD November 2024).

Notes from Mark LeFerriere, Assurance Partner
"As of press time, the big news is obviously the recently announced tariffs on Mexico (25%, though now delayed), Canada (25% with 10% carveout for energy, but apparently subject to further discussion later today)*, and China (additional 10%)."

"It’s difficult to know the extent of the impact the tariffs will have on the furniture industry and overall economy if fully implemented. In addition to the pure importers and those with hybrid operations, many companies that would be considered “domestic” manufacturers still source certain fabric, frames, and various components from foreign vendors."

"While likely greatly oversimplifying a very complex situation, an additional 10% tariff on Chinese goods would seem manageable given the inflationary pressures the industry has dealt with in the last few years, coupled with the long product pipeline allowing time for companies to make necessary adjustments."

"What seems more immediately concerning is the potential impact of tariffs on Canadian lumber utilized by the US housing industry as well as Canadian energy and the impact that could have on inflation in general, and specifically, consumer spending, interest rates, and ultimately housing activity that drives the furniture industry."

"This all follows a Vegas market which was largely reported to be positive, an averted port strike last month, as well as recent gains in housing and positive trends at retail."

"What makes this situation so difficult are the unknowns, the volatility, and the potential for change/reversals with or without notice, including the potential for tariffs on other Asian countries such as Vietnam and the impact of expected retaliatory tariffs on US exports."

"Those in the industry are certainly smart enough and experienced enough to navigate any playing field, but they just need to know the rules of the game they’re playing. So, while these items are certainly disruptive in the short-term, the industry has dealt with similar situations in the past and we’re hopeful there are still enough things trending in the right direction so that the positive outlook for 2025, especially the second half, will materialize for those who have worked so hard to get to this point."

*also delayed now.



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