HIGH POINT, N.C. - Residential furniture orders continued to grow, rising 7% in December compared to the year prior, capping off a 12-month streak of year-over-year growth, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from Smith Leonard.

"The increase in new orders was a bit surprising for December based on our conversations," said Ken Smith, managing partner at Smith Leonard. "With only 45% reporting increases, the increase was driven by some large increases. We wonder if maybe the tariff issues had something to do with the pickup in orders in December."

Year-end figures for 2018 show a 6% gain in new orders, compared to 4% in 2017.

The February 2019 Furniture Insights report also reports shipments were basically flat compared to December 2017, but off 19% from November's figures, "a normal drop-off due to the vacation week." December shipments were up for 55% of the participants, compared to 62% in November.

2018 shipments overall shows a 3% rise compared to the year prior, with 66% of the survey participants reporting increased numbers. This follows the 5% gain in 2017 compared to 2016 figures.

Backlogs were 13% higher than December 2017, the accounting and consulting firm reported. "At the end of December 2018, receivable levels were 7% higher than the end of 2017, even though shipments were flat for December alone and up 3% year to date. Receivables only fell 3% from November while shipments were down 19% from November. We think this was probably a timing issue and expect them to fall more in line, but we will need to watch."

Inventories rose 6% over December 2017, but were down 1% from November.  "Considering orders were up 6%, we would think that inventories remain in fairly good shape," noted Smith.

December sales at furniture and home furnishings stores dropped 1.3% from November 2018 and declined slightly, 0.2%, from December 2017. Sales at these stores were up 3.5% for the year, according to the Furniture Insights report.

"Both consumer confidence reports were positive after recent declines. Both these reports and the Economic Indicators reports noted that the economy growth is slowing and is expected to taper off in 2019. The initial GDP report for the fourth quarter of 2018 was showing growth at 2.6% down from 3.4% in the third quarter. But the 2 plus percent they project for 2019 is not all bad. Growing at the very fast rates over long periods makes it difficult to find workers with the right skillsets," Smith said.

"The delay in tariffs (till when) is helpful but makes it hard to plan what to do. We would like to think that sometime soon there is a timetable. Lots of production has been moved around with a lot of trouble and some more adjusting may be needed. It would be nice to know if and when more adjustments may be needed," he added.

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