We noted last month the recent conversations had indicated some slowdown in business. The January results showing an 8% increase did not seem to prove this out. Apparently, the news was a bit early as the February results fell in line with expectations, with orders falling 5% in February from February 2018.
This decline reduced year to date new orders to an increase of 1% over the first two months of last year. Last year’s first two month orders were up 4% over the previous year. Approximately 56% of the participants reported a decline in orders for the first two months of 2019.
Shipments fell 3% from February 2018 after a 14% increase last month. This decline reduced year to date shipments to a 5% increase. About one-half of the participants reported year to date increased shipments.
Backlogs dropped from a 9% increase reported last month to a 7% increase in February. Backlogs were about even with January levels as orders and shipments in dollars were about the same.
Receivable levels remained in line with year to date shipments although with the decrease in shipments for the month, we might have thought they would go down some. We will watch next month. Inventory levels fell 3% from January. With the slowdown in business talked about, this decrease made sense. Inventory levels remained 5% ahead of last year at this time.
Factory and warehouse employees were down 2% from last February, the same as reported last month. Payrolls were up 3% over last year’s first two months. Some of that may be reflecting raises given by many last year trying to keep and attract employees.
The Conference Board Consumer Confidence Index® improved in April after decreasing in March. Both Present Situation and Expectations Indexes improved. The percentage of consumers short-term outlook improved as well as the outlook for short-term income prospects. Lynn Franco, Senior Director of Economic Indicators, said that while confidence was still not at the level of last Fall, the strong conditions indicated in the survey should continue to support consumers spending in the near term.
The preliminary report from the University of Michigan Surveys reported a continued “sideways shuffle” in early April, reporting a small decline. But the levels over the last 30 months were higher than any such period since 1997 to 2000, the final phase of the 10-year expansion. It noted that rising nominal incomes and low inflation were producing strong gains in inflation adjusted incomes. But it also noted that vehicle and home buying have not benefitted from low prices as consumers have complained about rising vehicle and home prices.
Existing-home sales in March fell both for total sales as well as for single-family homes. Sales fell from February as well as from last year March sales. Single-family sales were off 4.7% from a year ago. Regionally, sales were down from a year ago, 1.5% in the Northeast, 8.6% in the Midwest, 2.1% in the South and 10.7% in the West. The median price was up in all regions from 2.4% to 4.6%.
For better news, new home sales in March were up 4.5% from February and were up 3.0% over March 2018. Sales were up in the Midwest and South but decreased 20.0% in the Northeast and 4.3% in the West.
Housing starts in March were off slightly from February but down 14.2% from March 2018. Single-family starts were off 11% with all regions except the South reporting declining starts from March a year ago.
The Conference Board’s Leading Economic Index for the U.S. (LEI) improved again in March, increasing 0.4%. The report noted that despite the relatively large gain in March, the trend seems to indicate the growth in the U.S. economy is likely to decelerate towards the long-term potential of about 2% by year end.
Surprisingly, the advance estimate of Gross Domestic Product reported a growth rate of 3.2% for the first quarter up 2.2% in the fourth quarter of 2018. Most of the factors improved except for a decrease in residential investment.
Advance reports for U.S. retail and food services for March indicated an increase of 1.6% from February and a 3.6% increase over March 2018. Sales at furniture and home furnishings stores on an adjusted basis were up 1.7% over February and 1.1% over March 2018. On an unadjusted basis, sales were down 0.9% year to date.
The Consumer Price Index increased 0.4% in March after a 0.2% increase in February. The all items index increased 1.9% for the 12 months ending March up from 1.5% in February. The all items less food and energy rose 2.0% over the same period. The gasoline index increased sharply as we have seen.
Non farm employment rebounded from a disappointing February, with March results indicating an increase of 196,000. Most job gains occurred in health care and professional and technical services.
Well, the recent conversations of slower business finally showed up in our survey results for February. And in spite of a very good market from a feel-good standpoint, orders have not picked up that much since Market, according to informal talks with clients and others. In fact, a few mentioned words like very slow or worse.
A couple of people we talked to indicated that they had noticed some improvement recently.
I also spoke with a multi-bag sales guy yesterday morning who said his recent road trip was very good and business seemed to have picked up at the retailers he called on just last week.
Consumer confidence remains at very good levels, according to the surveys. And the stock market has continued to perform. Housing though, continues to be held back some due to higher prices. So overall, most people we talk to do not understand why the furniture business is not better than it is.
We know that weather in many parts of the country has been pretty bad. That along with all the negative news on TV, is keeping people from spending on furniture products, at least the larger ticket items. Hopefully as it appears Spring has finally sprung in some parts, consumers will feel better about their spending.