HIGH POINT, N.C. - Residential furniture orders fell 3 percent in May compared to the previous year, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from Smith Leonard.
The survey of residential furniture manufacturers and distributors showed that new orders in May were down again, falling 3 percent compared to May 2018. The decline in orders in May was the fourth consecutive month of declining orders. Approximately 59 percent of the participants reported reduced orders, according to Smith Leonard.
Year-to-date, new orders remained 3 percent below the first five months of last year with 64 percent of the participants reporting reduced orders. Last year, new orders year-to-date through May were up 6 percent so the decline this year may not quite as bad as it might seem.
Shipments were down 3 percent from May 2018, bringing year-to-date shipments down to a 1 percent increase so far this year. Receivable levels, up 5 percent over May 2018, seemed a bit out of line compared to shipments, but shipments in May were up 7 percent over April so this issue may be one of timing. Inventories remained at high levels, up 12 percent over May 2018. Some of this could be tariff related, but inventory levels need to be watched.
Factory and warehouse employee levels and payrolls were a bit high but not too much out of line. Due to a shortage of workers in many areas, Smith Leonard believes overall wages are up plus high turnover and training costs are hurting some participants.
Meanwhile, existing home sales fell in June after gains reported in May. Overall sales were down 1.7 percent from May (single-family sales off 1.5 percent). Regionally, sales were off from a year ago in all four regions of the country.
New single-family home sales in June were 4.5 percent ahead of June a year ago, with sales up in the South and West, but down 50 percent in the Northeast and 17.6 percent in the Midwest.
Housing starts were off slightly from May 2019 but were 6.2 percent ahead of June 2018. Starts were up in the Midwest and South, but were down in the Northeast and West.
Once again, the latest survey continued to support what Smith Leonard has been hearing regarding slower business. And, they are not really hearing much encouragement for June-July results.
“We do need to keep in mind that we are comparing to pretty good numbers last year, so it is not like we are declining after prior year declines. But still the feeling is that business is soft. Even those doing well one month or quarter are not always able to put two periods back to back,” Smith Leonard commented.
“We have always said that the industry does not do well when confidence is down. And we always believed it performed better when there was strong confidence. We wonder why that is not working as well this time. We hope to see some pickup after summer vacations, etc. We will need some before the political ads start and all the news goes to elections.”
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