Shipments of commercial furniture fell in the third quarter, according to the Michael A. Dunlap & Associates October 2019 Quarterly MADA / OFI Trends Survey.

The October 2019 index for gross shipments fell to 58.33, nearly 16 points after the July 2019 Index jumped more than sixteen points to 74.00. The third quarter October index remains above the 59-survey average, considered to be important.

Dunlap said that it is critical to recognize this reflects the rate of change over both the first and second quarters. First quarter was unusually below the 57.79 survey average and the previous six months. Dunlap sees this as a correction to the previous patterns.

The quarterly survey measures the current business activity of the commercial (office, education, healthcare, & hospitality) furniture industry and its suppliers. This survey was completed during the month of October 2019 and marks the 59th edition.

“We still feel good about where the industry is currently,” Dunlap said. “The effects of the tariffs with China have dampened the third quarter and will likely impact the fourth quarter and first quarter of 2020. The overall economic growth seems to be slowing down and will probably affect this industry in 2020.

“In spite of the third quarter declines, we believe that the industry remains very strong. “We are surveying many more than five or six companies. The “Big Twelve” are generally doing very well. However, it is the smaller ‘under $50 million sales and fewer than 150 employees’ companies that are driving this industry.”

Also, order backlog index fell during the survey period. Employment Index measures the degree of increase or decrease in employment levels. The October 2019 Index declined by 4.22 points but is almost equal to the 5- survey average.

The Capital Expenditures Index has steadily been in the mid to upper 50's. The October 2019 survey follows this pattern and is only 1.5 points below the 59-survey average. The Tooling Expenditures Index tends to remain very steady from quarter to quarter and typically tracks along with Capital Expenditures, but the continued below average index during both the 2nd and 3rd quarters is an unpleasant surprise.

Regarding the raw material costs index, many commodity prices in the third quarter of 2019 continued to increase. Tariffs were felt during this quarter that were not reflected in the fourth quarter of 2018 or first or second quarters of 2019. The current index indicates that material costs have increased and are higher than average. Dunlap suspects that this will worsen in the fourth quarter of 2019.

The October 2019 overall index Survey Index of 53.14 is just slightly below the 59-survey average. Two out of ten index values improved from the previous quarter. With the exception of Order Backlog, the other Index changes are within normal or acceptable values.

The most frequently cited perceived threats to the industry’s success continue to be tariffs, travel, transportation and logistics costs. Healthcare costs are still the most commonly cited concern from respondents since this survey process was started in August 2004.

For further information, contact Mike Dunlap at 616-786-3524, [email protected], http://www.mdunlap-associates.com