US Furniture Insights  



Executive Summary of March 2016 Issue of Furniture Insights Report

by Kenneth D. Smith, CPA, Smith Leonard PLLC


Our latest survey of residential furniture manufacturers and distributors continued to show slower business conditions for this part of the industry through April 2016. New orders were down 3 percent from April 2015 with 69 percent of the participants reporting lower orders. This decline brought year-t0-date orders to the negative, falling 1 percent from the first four months of last year. (Last year at this time, new orders were up 5 percent.)

Year-to-date, new orders were down for 64 percent of the participants. This compared to 56 percent reporting lower orders last month. The April decline in orders marked the 3rd straight month of declining orders, following 1 and 2 percent declines the previous two months.





Shipments also declined 3 percent in April, bringing the year-to-date results to just under a 1 percent increase. In April, only 36 percent of the participants reported increased shipments. Year-todate, 53 percent are reporting declines in shipments.

Backlogs fell 1 percent from March as shipments exceeded orders. Backlogs were 7 percent lower than April 2015. Receivable levels remained in good shape, down 6 percent from April 2015. Inventories need to be watched as they were 4 percent higher than April 2015, with orders and shipments not really growing. Overall factory and warehouse payrolls and employee levels were reasonably in line, though payrolls were a bit high.

National


As with last month, the two consumer confidence surveys were somewhat opposite, though they flipped this month with the Conference Board’s survey showing improvement and the University of Michigan survey showing confidence off a bit. The Conference Board survey indicated the consumers were moderately more positive about current business and labor market conditions.

And while the Michigan survey was a bit less optimistic in June, the survey did note that “consumers voiced the most positive assessments of their finances since late 2000” due to income increases and few complaints about inflation. The latest report on GDP indicated first quarter growth of 1.1 percent up from 0.8 percent reported in the last estimate. The Conference Board’s Leading Economic Index declined 0.2 percent in May following a 0.6 percent increase in April and a 0.1 percent increase in March.

Housing


Existing-home sales increased in May to their highest pace in almost a decade. This increase, coupled with a lagging supply, pushed the median sales price to an all time high. Single-family home sales increased in May 1.9 percent over April and were up 4.7 percent over last year with all regions of the country increasing except the Midwest.

New house sales in May were down 6 percent from April but were 8.7 percent above May 2015. Sales were up in all regions except for the West. Housing starts were down 0.3 percent from April but up 9.5 percent over May 2015. Starts were up in all regions except the West.

Other National


Retail sales were up 0.5 percent over April and up 2.5 percent over May 2015. Sales at furniture and home furnishings stores were up 0.2 percent over May and 4.1 percent year-to-date. Inflation continued to be at reasonable levels, rising 1 percent for all items for the 12 months ending May and while there were not that many jobs created in May (38,000), the unemployment rate dropped to 4.7 percent.

On a more current news basis, the U.K. pull-out of the European Union has caused both international and national concerns. The stock market fell substantially for two days but has rebounded part of the losses in the last two days (through Wednesday the 29th). The terrorists actions in Turkey and here at home in Orlando have also been alarming.

And as we have discussed over and over, the election campaigns are full of bad so called news. Only it seems to be getting worse with the candidates really laying it on with attacks on each other.

As for the residential furniture business, we are hearing from a few of you that business may be improving a bit, though the time of year tends not to be the best part of the year for sales.

We hope you all have a safe July 4th holiday here in the U.S. Hopefully most people can relax over the long weekend and come back ready to go, to start the normal better last half of the year.