Epperson: Furniture recovery will start this fall
But rebound will be modest, says analyst
Jay McIntosh -- Furniture Today, June 4, 2008
RICHMOND, Va. — Furniture and bedding sales will start to recover this fall, but the rebound will be modest compared with past economic cycles, according to a new five-year forecast from analyst Jerry Epperson of Mann, Armistead & Epperson.
U.S. industry sales at retail will decline 4.1% this year to $83 billion, then increase 2.8% in 2009 and at 4% or less in each of the next three years, he predicts.
Wholesale shipments, including domestic production and imports, are forecast to follow a similar pattern with a 2.1% decline this year and annual growth rates between 3.4% and 4.9% in each of the next four years.
“We believe the remainder of 2008 should be approached with concern with hopes for a slow, steady recovery beginning this autumn,” Epperson wrote in the introduction to the forecast, which he released this week. “The best news is that the headlines should be more positive as the year progresses, showing a bottoming in the housing sector, lower inflation in petroleum and food prices, and a slight improvement in the new job market, but not enough to offset a rising unemployment rate.”
Looking at figures from several sources, he said that in the first quarter, U.S. retail sales of furniture and bedding were down 2.1%. Wholesale shipments were down in all categories, ranging from a 6% decline in bedding to a 13.2% tumble in domestic wood furniture.
For the full year, Epperson expects wholesale shipment gains of 1% in upholstery and 2.9% in mattresses, and declines of 5.4% in wood and 3.3% in metal furniture.
In 2009, stronger growth in the U.S. economy and a rebound in the housing market — although housing starts will stay far below the 2007 level — should deliver a recovery that the industry will begin to perceive with the seasonal second-half pickup, he said.
“Our forecast for 2009 is for a 2.8% gain in retail sales of furniture and bedding,” Epperson wrote. “Yes, this is very modest, especially relative to past economic recoveries, but we believe the ongoing impact of the combined housing collapse and credit crunch will be more challenging than seen in past recoveries.”
One new index that Epperson has developed, using Department of Labor figures, shows price changes for imported furniture and related products. The figure crept upward last year and started rising more sharply this year. In April, the import price index was up 6.53% from April 2007.
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