US Furniture Insights  



Executive Summary of November 2015 Issue of Furniture Insights Report

by Kenneth D. Smith, CPA, Smith Leonard PLLC


For the first time in 18 months, we did not see an increase in new orders in September 2015 compared to September 2014, according to our latest survey of residential furniture manufacturers and distributors. But the good news is that we are not reporting a decrease but instead the new orders were basically flat. Approximately half of the participants reported increases for the month.

Year-to-date, new orders were up 4 percent over last year, down from 5 percent reported last month. For the year, approximately half of the participants are reporting increased orders, as September results pushed some participants from slightly positive to slightly negative.

Shipments were up 3 percent from September 2014 and up 1 percent from August. Year-todate, shipments remained 7 percent ahead of the same period a year ago. At this time last year, shipments were 6 percent ahead of 2013, so the 7 percent increase is off of some pretty good numbers.

Backlogs were up 2 percent from last month and up 3 percent from September 2014. September 2014 backlogs were also 3 percent higher than September 2013, so overall the backlog levels seem to pretty much reflect current business conditions.

Receivable levels were right in line with the increase in shipments from September 2014 and August 2015. Inventory levels were 7 percent higher than September 2014 but that was down from 9 percent reported last month. Inventory levels will need to be watched.

Factory and warehouse payrolls remained 7 percent ahead of last year on a year-to-date basis, but that seems in line with the increase in shipments. The number of factory and warehouse employees was 4 percent ahead of last year, very much in line with current conditions.

National
On the national front, consumer confidence results were mixed. The Conference Board’s Index, which declined moderately in October, declined again in November to 90.4 from 99.1 in October. The decline in this survey related primarily to the less favorable view of the job market, with business conditions mixed.

On the other hand, the University of Michigan’s surveys of consumers reported that their Index of Consumer Sentiment actually improved from 90.0 to 91.3 in November. Their report was also mixed as most of their gains came from gains among middle and low income households while confidence “retreated” among households with incomes in the upper third of the distribution. This report did indicate that consumers are insistent on discounted prices and lower interest rates (housing).




The latest GDP estimates for the third quarter show an increase of 2.1 percent annual rate up from 1.5 originally estimated. And the Conference Board’s Leading Economic Index increased 0.6 percent in October following 0.1 percent declines in September and August.

Housing results were somewhat mixed with existing home sales off from September but still ahead of last October. Each of the four regions showed a decline from September but all were still ahead of October 2014. New residential sales were up over both September and October 2014. Compared to October 2014, new sales were up 60 percent in the Northeast and 5.2 percent in the South, but were down 4.8 percent in the Midwest and 2.6 percent in the West.

Single-family starts were down 2.4 percent from September but 2.4 percent ahead of October 2014.

According to the Census Bureau, retail sales in October were up slightly from September and up 1.7 percent from October a year ago. Sales at furniture and home furnishings stores were up 0.4 percent from September and up 5.2 percent over October 2014. Year-to-date, sales at these stores were up 5.5 percent over the same period a year ago.

After some swings in the stock market, a good portion of what we lost has come back in October and November. So that is good.

Overall, we continue to hear business described as “choppy.” Most we have talked with seem to have confirmed that the October market was a good one. Yet, we continue to hear that business is at best “ok.”

We hope by the time you get this, you have had a wonderful Thanksgiving weekend. We all have so much to be thankful for and hopefully we took some time to give thanks. As an industry, we are certainly better off now than we were a few years ago.