HIGH POINT, N.C. - Despite gains in October and November, residential furniture orders dropped 9% in December compared to the year prior, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from Smith Leonard. December's drop is only the second time in 2017 where new orders decreased compared with the same month in the year prior.
The good news for 2017 was that year-to-date, new orders were up 6% over last year, with shipments also up 4%. "In spite of the slow finish in December, 2017 was what we would say was a decent year," noted Ken Smith, managing partner at Smith Leonard. "While there were a few participants up low double digits, the participants in general were fairly close together."
Shipments in December dipped 7% compared to the same period in 2016, with about 60% of the participants reporting declines. Backlogs fell 10% compared to November, and also down 4% compared to December 2016, Smith Leonard reported.
Receivables were down just 1% compared to last year, in spite of the 7% increase in shipments. December 2017 inventories were 6% higher compared to 2016, and up 3% from November. "We suspect with orders being up most of the year, the large decline in orders did not allow adjustments fast enough to inventories," Smith said.
On the retail side, sales at furniture and home furnishings stores were up 4.7% in January over January 2017 on an adjusted basis and 6.6% unadjusted, according to the report. Consumer confidence reports are also positive.
"The Conference Board’s Index being highest since 2000 was very encouraging," Smith said. "We expect the continued volatility of the stock market to have some effect, but it is almost as if, in general, consumers seem to be somewhat used to these issues."
He added, "We have heard that January started somewhat slow but seemed to pick up some and on into February. We have said it over and over, but from a national economic standpoint, there is no major reason for business not to continue to be pretty decent until something causes the economy in general to slow."
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