HOLLAND, Mich. – The commercial furniture industry finished 2018 on a strong note and continues that way into 2019, according to the January 2019 quarterly MADA/OFI Trends Survey.
The January 2019 survey index of 59.31 is boosted by strong improvements in nine out of ten individual index values and brings it closer to the highest recorded index of 59.72 in July 2005. The lowest was 41.45 in April 2009 during the bottom of the recession.
“The industry remains very strong,” said Mike Dunlap of Michael A. Dunlap & Associates. “The Overall Index has improved to near record levels and is well above the 55.05 Survey average.
“I feel good about where the industry is currently. (The year) 2018 finished strong in spite of the current political uncertainties, the effect of the mid-term elections, tariff and trade questions, The effects of the current U.S. government shutdown are still too early to predict (on) general economic growth and how they may affect this industry.”
The Michael A. Dunlap & Associates, LLC quarterly MADA/OFI Trends Survey measures the current business activity of the commercial (office, education, healthcare, and hospitality) furniture industry and its suppliers. This survey was completed during the month of October 2018 and marks the 55th Edition.
The survey focuses on 10 key business activities and respondents rate each area on a scale of 10 (the highest) to one (the lowest). these include gross shipments, order backlog/incoming orders, employment levels, manufacturing hours (overtime vs. reduced hours), capital investment, tooling expenditures, new product development activity, raw material costs, employee costs, and the respondents personal outlook on the industry.
The survey establishes an Industry Index Number to quantify where the industry is currently performing. The January 2019 survey highlights are: Gross Shipments Index: 64.40 for the January 2019 Index, compared to
58.24for the 56-survey average index. The January 2019 index jumped more than four points to 64.40 and is well above above the 58.24 survey average.
Order Backlog Index was 67.92 for January 2019, compared to 57.81 for the 56-survey average. This is seen as a positive indicator for industry sales for the first quarter of 2019 and into the second quarter.
The Employment Index measures the degree of increase or decrease in employment levels. The January 2019 Index 55.20 improved by three points is well above than the average. In West Michigan and many other industry locations, labor shortages are driving up wages but increased hiring remains strong.
The Hours Worked Index slipped by less than one point from October 2018. Dunlap said this is still reflective of the inability to fill both entry level and skilled positions which are still are driving up hiring and hours worked. Overtime is now the norm, not the exception.
Historically, the Capital Expenditures Index has steadily been in the mid to upper 50s. The January 2019 survey accelerated by almost nine points to 61.20 over the October Index. It is significantly higher than average. The all-time high was 64.74 in April 2017. The Tooling Expenditures Index tends to remain very steady from quarter to quarter and typically tracks along with Capital Expenditures, but the significant increase during the 4th Quarter is a surprise.
Raw Material Costs Index was 47.40 for the January 2019 Index. Many commodity prices in the 4th Quarter of 2018 remained steady. Tariffs have not subsided nor increased. Through 2015 and into 2016, the average was 50.95. The current index indicates that material costs have steadied.
The Personal Outlook Index was 66.54 for January 2019. This is the strongest they have seen since they began the
survey. It has remained over 61 for the past 20 quarters. This is remarkable and most certainly gives a boost to the Overall Index, Dunlap said.
“We are surveying many more than five or six companies,” Dunlap said. “The Big Nine are experiencing excellent growth, the smaller under $50 million sales and fewer than 250 employees are driving this industry.
“The most frequently cited perceived threats to the industry’s success are tariffs, travel, transportation and logistics costs. Healthcare costs have been the most commonly cited concern from respondents since this survey process was started in August 2004.”
For further information, contact Mike Dunlap, 616-786-3524, e-mail: [email protected], see http://www.mdunlap-associates.com
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