HIGH POINT, N.C. - Residential furniture orders rose 5% in July compared to the year prior, marking the third straight month of 5% growth over the same month a year prior, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from Smith Leonard.
"The 5% increase was a good one considering July 2017 orders were 11% higher than July 2016," said said Ken Smith, managing partner at Smith Leonard.
The September 2018 Furniture Insights report also demonstrates seven consecutive months of year-over-year growth in orders for the residential furniture industry. Orders were up for 57% of the participants, the accounting firm reported.
Year-to-date new orders remain 6% ahead of last year's figures for the same time period.
Shipments were also up for the year-over-year comparison, showing a 6% gain in July compared to 2017 figures, and up 3% for the year. And although shipments dropped 18% compared to June figures, Smith Leonard noted that the decline is "normal" considering companies typically shut down a week around the July 4 holiday.
Backlogs were flat compared to June figures, but up 4% compared to July 2017, Smith Leonard reported. "Receivable levels fell back in line with a 5% increase over last year, in line with the 6% increase in shipments," according to Smith Leonard. Inventories were up 3% over June levels, and 4% over July 2017. "Both increases seemed to be in line with current business levels."
"When looking at most all the national economic news that we think that affects the industry, business should be pretty good. Consumer Confidence is the strongest it has been for years and we know that confidence is the key for buyers to purchase larger ticket items. But housing remains a bit sluggish due primarily to the lack of inventory as well as higher prices, so that is having some impact," Smith said.
Sales at furniture and home furnishings stores were up 3.5% in August compared 2017 figures, on a seasonally adjusted basis, with year-to-date retail sales up 5.0% for the first eight months.
"The looming tariff issues continue to be worrisome. Some folks do not think it is a big deal at the 10% levels, considering also the drop in the value of the currency, but others are not so sure," Smith added. "Most we talk to and read believe that if the tariffs come into effect, the tariffs will be temporary, and people will just have to adjust for the time being. But should they be in effect long term and even higher, prices will have to go up.
"For people to say they will not accept any price increases, well that just doesn’t make sense. If you want a good supplier of any product, they have to make a reasonable profit, or they won’t be there. Hopefully, if it comes into effect, it will be temporary."
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