Factory orders rise 2% in Oct.
By Furniture Today Staff -- Furniture Today, January 13, 2008
High Point — U.S. residential furniture factory orders were up 2% in October from the same month a year earlier, according to Smith Leonard, the first month since July that more than half the factories surveyed by the accounting and consulting firm — 57% — reported positive monthly comparisons.
But Ken Smith, managing partner of Smith Leonard, said the uptick may be related to the later timing of the High Point Market, and that he would wait to see if the improvement continued in November.
For the first 10 months of 2007, orders were running 4% behind the previous year's pace. About 70% of survey participants reported lower orders for the year to date.
October factory shipments, meanwhile, were about 1% below the October 2006 level. Year-to-date shipments were off 5%, with about 74% of participants reporting a decline.
"While there was some good news with new orders in October, our talks with manufacturers and distributors do not indicate good news for most companies through December," Smith said in the firm's monthly Furniture Insights newsletter.
He added that, in addition to weak business conditions, the industry is likely to see higher wholesale prices because of higher costs for freight, raw materials and labor in China.
While many retailers say they can't raise prices to consumers at a time of such weak demand, Smith said that "for the good of those left in the industry, prices need to go up." Retail price increases are needed to allow companies to maintain margins and make a reasonable profit, he said.
| Factory orders, shipments in October | |||
|---|---|---|---|
| In billions of dollars | |||
| Change from | |||
| Sept. '07 | Oct. '06 | ||
| Source: Smith Leonard |
|||
| Orders | $2.261 | 3% | 2% |
| Shipments | 2.112 | -3% | -1% |
| Order backlog | 1.668 | 3% | -4% |
| Jan.–Oct. | Change from 2006 | ||
| Orders | $21.050 | -4% | |
| Shipments | 20.943 | -5% | |
