New orders for residential furniture are continuing to see big growth, rising 47 percent in May 2021 over May 2020. This marks 12 straight months of year-over-year increases, as reported by Smith Leonard in the latest issue of Furniture Insights.
"Year to date, the results remained very strong with orders up 67 percent over the first five months of 2020. Orders were up for 97 percent of the participants year to date.
"We did compare the 2021 year-to-date results with that of our 2019 survey. This comparison showed new orders up 36 percent over the first 5 months of 2019. These results show that business really has continued to be positive since the beginning of the comeback from the basic shutdown of the economy in the March/April 2020 time frame.
"Shipments were up 64 percent in May 2021 compared to May 2020 and up 43 percent year to date. Shipments were up for 97 percent of the participants year to date. Compared to the first five months of 2019, shipments were up 17 percent in 2021. Again, showing that business really has been good since the shutdown.
"New orders continued to exceed shipments, so backlogs increased again in May, up 3% from April and reaching an increase of 214% over May 2020. There have been continued issues with lack of labor and acquiring raw materials, primarily foam for upholstery, as well as other raw material shortages. Also, issues with imports due to labor and other problems in countries where factories are not back up and running are keeping companies from being able to get backlogs down. Adding to those are problems with freight, whether it be lack of containers, port delays, or even trucking issues in the states. We see that the whole industry is just not able to keep up with the current demands for goods at the retail level.
"Receivable levels remain in good shape, as with backlogs as they are, slow payers are not getting their goods in line to be made or shipped, so most companies are seeing their receivable agings in good shape. Inventory levels continue to rise with demand, though if inventory items were available, one could justify even higher levels.
"The industry continues to experience a strange duality of success with orders flowing in but also being mired in backlogs as product is not flowing out with various delays and supply issues. Manufacturers continue to have labor problems.
"For importers, certain problems continue and some are very real issues. COVID has hit several countries very hard. Most recently, several facilities in Vietnam have been shut down for periods of time including several furniture facilities. In addition, container shortages, extreme price increases for containers (if you can get one), and continued issues at the ports create significant issues for importers.
"For all, there are trucking and freight issues here in the U.S. Significant pricing issues persist, and prices have had to go up through regular price increases as well as surcharges for items such as freight that hopefully will level off again at some point. We’re intrigued that the consumer price index report noted that indexes for several items were up substantially, but household furnishings and a couple of other indexes were among the few component indexes that decreased. But there is a lot of talk about inflation in general with the fears that it could cause a slowdown in the economy. As with all other economic news, we struggle to determine media hype from reality."
See the full report: https://www.smith-leonard.com/2021/07/30/july-2021-furniture-insights/
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