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Furniture orders slow to 3% growth in November

2019-02-01 Tag: Furniture

New orders for furniture increased 3% in November compared with such activity in November 2017, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from High Point accounting and consulting firm Smith Leonard.

 

That came on the heels of 7% and 9% increases, respectively in September and August.

 

“The smaller percentage increase seemed in line with conversations we had during November and December about business being a little slower,” said Smith Leonard Partner Ken Smith in the survey report. “But when looking at the results for November 2017, new orders were up 11% over November 2016 so the smaller increase was really not that bad.”

 

Through November, new orders for 2018 remained 6% ahead of the same period of last year, when year-to-date new orders were 5% ahead of the previous year.

 

Shipments in November increased 8% from November 2017 levels, compared with a 4% increase for the November 2017 comparison to November 2016.

 

“We had noted that we expect shipments to start catching up with orders since orders had exceeded shipments for several months,” Smith said.

 

Shipments through November remained 3% ahead of the same point last year, when shipments were up 5%.

 

Backlogs increased 1% as the dollar value of orders was higher than shipment dollars. Backlogs were only 9% higher than last year compared with double digit increases reported the last couple of months.

 

Receivable levels increased 7% from November 2017, in line with the monthly increase in shipments of 8%.

 

“They did increase 5% over October levels in spite of only a 1% increase in shipments for that period, but overall appear in line,” Smith noted.

 

Inventories were flat compared with October levels and up 7% over November 2017. In October inventories were up 9% over the previous year.

 

“This month’s increase appears to be more in line with somewhat slower business,” Smith said.

 

Factory and warehouse payrolls rose 5% higher from November 2017, up from a 4% increase reported last month. Year to date, payrolls were 3% higher than the same period a year ago, and rose from the increase 2% reported for October.

 

Factory and warehouse employment remained flat in November compared with October and down 2% from November 2017, the same decrease reported last month.

 

In summary, Smith reiterated that the slower increase in orders in November was a little misleading.

 

“While we had heard business seemed a little slower for some, the comparison to November 2017 was a tough one as November 2017 orders were up 11% over November 2016,” he said. “So, a 3% increase over the 2017 results was not all bad.”

 

He added that lower Consumer Confidence reports were not surprising, considering the government shutdown and stock market volatility, and that existing-home sales results were a bit of a concern.

 

“Overall, though, with orders up 6% year to date and shipments expected to follow, 2018 does appear to be a pretty decent year,” Smith said. “Certainly, not for all, but with almost 70% reporting increases in orders, at least many had a nice year.”

 

Headwinds on business include another potential government shutdown, severe weather and concerns tariffs on goods made in China.

 

“Hopefully, the tariff issue will be settled,” Smith said. “Most expect the 10% to remain, but there is still hope the 25% will not go into effect.”

 

 

(Source: JJgle.com)