US Furniture Insights  

Executive Summary of September 2015 Issue of Furniture Insights Report

by Kenneth D. Smith, CPA, Smith Leonard PLLC

New orders in July 2015 increased 4 percent over new orders in July 2014, according to our latest survey of residential furniture manufacturers and distributors. July 2014 orders were 5 percent higher than July 2013. The July 2015 continued the string of increased orders, up 16 straight months and 24 of the last 25 months.

Year-to-date, new orders remained 5 percent ahead of the same period a year ago. Approximately 56 percent of the participants have reported increased orders, year-to-date up slightly from last month’s results.

Shipments were up 7 percent in July 2015 over July 2014. July 2014 shipments were 7 percent higher than July 2013. Shipments in July were down 11 percent from June but that is typical with most companies shutting down a week in July for the holiday.

Year-to-date, shipments were up 7 percent over last year with some 72 percent of the participants reporting increased shipments, up slightly from last month’s percentage. Backlogs were 9 percent higher than July 2014 down from 12 percent reported last month. Last year at this time, backlogs were up 5 percent so overall, backlogs remain pretty heavy.

Receivable levels were up only 2 percent over last year in spite of strong shipments and continue to appear to be in good shape. Inventories crept up 2 percent from June but remained 6 percent ahead of last July, the same as reported last month. Overall, inventories seem to be in line with current business conditions.

Factory and warehouse employees and payrolls also appear in line. Employee levels were 3 percent higher than July 2014. Factory and warehouse payrolls were up 9 percent for the month but only 6 percent year-to-date, which is also seemingly in line with current business conditions.

The two consumer confidence reports were not exactly in sync this month, though both were relatively positive even though the University of Michigan report noted that its index was down a bit. Overall, both reports seemed to indicate positive moods from consumers.

Housing results were mixed. Existing home sales in August were down 4.8 percent and wiped out most of the last 3 months gains. Single-family home sales were down 5.3 percent. Sales were down in all four regions of the country. Still sales of these homes were 6.2 percent ahead of last year at this time.

On the other hand, sales of new homes in August were up 5.7 percent from July and 21.6 percent higher than August 2014. Sales of these houses were up in all 4 regions of the country. Housing starts were down a bit from July but remained 16.6 percent above August 2014 levels.

Retail sales were up 0.2 percent from July and 2.2 percent over August 2014 levels. Sales at furniture and home furnishings stores were up 3.7 percent over August 2014 and up 5.3 percent yearto-date ranking 5th in percent growth among the 13 sectors followed by the Census Bureau.

Gas, oil and energy prices continued to help with overall inflation rates with the index for all items less food and energy increasing 0.1 percent. Apparently, this helped the Feds in their decision not to raise rates in September. One economist told us that he feels sure they will raise rates in October ― or maybe December which are the only 2 remaining meetings scheduled for the year.

Employment gains were reported again in August, with 173,000 new jobs created in August. The unemployment rate dropped to 5.1 percent and the number of unemployed edged down to 8.0 million.

The stock market continues to create concerns. While it is said that most consumers now realize that the market moves on international news and not on domestic news only, we believe that significant movement in the market does affect all consumers as it is just more negative news for them to hear. Consumers realize it has more potential to affect them personally than news about ISIS or Syria, etc.

We also continue to hear street talk that business is just lacking consistency. While it appears that business continues to improve, there is some concern over the lack of consistency. Yet, other than the stock market (and all the presidential campaign rhetoric), most conditions are pretty good for the industry.

While the industry may not be booming, it appears that we are continuing to improve, for the most part. Let’s hope we can keep it going on through the October market. Premarket results were apparently pretty good, so hopefully there will be some carryover.