Furniture Insights  

US Furniture Insights

Kenneth D. Smith, CPA, Smith Leonard PLLC

Executive Summary of June 2015 issue of Furniture Insights Report

According to our latest survey of residential furniture manufacturers and distributors, new orders were up 3 percent in April 2015 versus April 2014. In 2014, orders in April were up 13 percent over April 2013, but as we noted last year, market dates being early in 2014 versus late in 2015 has some impact on when orders come in. We may see another shift in May.

Year-to-date, new orders were up 5 percent over last year where they were also up 5 percent over 2013. By the time we get the May results, we should have evened out the market issues and have a better feel. New orders year-to-date were up for 68 percent of the participants.

Shipments were 5 percent higher in April 2015 versus April 2014. April 2014 shipments were 12 percent higher than April 2013 so the 5 percent increase was a good one.

Year-to-date, shipments were up 7 percent over the same period a year ago. Last year through April, shipments were up 6 percent so this year is looking pretty good so far. Shipments were also up for 68 percent of the participants. Backlogs were down slightly from March but still up 7 percent over April 2014. Last year, April backlogs were 13 percent higher than 2013, so backlogs remain at pretty high levels overall.

Receivable levels were up 4 percent over April 2014 and were in good shape considering shipments. Inventories rose 3 percent from March and were 8 percent higher than April 2014. We will need to watch the inventory levels over the next few months.

Factory and warehouse employees, up 3 percent over April 2014, and payrolls up 5 percent over April and 5 percent year-todate, continue to be in line with current business. On the national level, according to the University of Michigan’s Surveys of Consumers, “Consumers voiced in the first half of 2015 the largest and most sustained increase in economic optimism since 2014. Just as important, the same record was set by households in the top third of the income distribution as well as by the middle third and those in the bottom third of the income distribution.”

The Sentiment Index was 96.1 in June 2015, up from 90.7 in May and significantly above last June’s 82.5. The Current Condition Index was up to 108.9 in June, up from 100.8 in May and last June’s 96.6. The Expectations Index rose to 87.8 up from 84.2 in May and June 2014’s 73.5. (Note The Conference Board’s Consumer Confidence results were not available at press time.)

The Conference Board’s Leading Economic Index improved again in May, following increases in April and March. Existing-home sales in May were 9.2 percent ahead of last May (single-family sales were up 9.7 percent). New residential sales were up 19.5 percent from May 2014. Sales of existing homes were up in all from four regions of the country while new houses sold were up in the South and the West, but down in the Northeast and Midwest.

Retail sales in May were up 1.2 percent from April and up 2.7 percent over May 2014. Sales at furniture and home furnishings stores were up 0.8 percent from April and up 6.2 percent from May 2014. Sales in this category were up 5.1 percent year-to-date over last year.

So with very little inflation shown by the Consumer Price Index and the good jobs reports, the economic news seems to continue to be good and should be good for the furniture business.

Most of the complaints we are now hearing, especially from domestic manufacturers, relates to lack of ability to hire enough people. This appears to be true, not only in the furniture business, but other industries as well. And a common quote is not just finding people who want a job, but finding people who actually want to “work” for a job.

Our survey continues to show good improvement in business. Summer slowdowns sometimes makes us a bit uneasy, but overall we think business should remain steady with decent growth for the rest of the year.