Furniture Insights: August orders up 9%

Weather and tariffs were concerns at October High Point Market

HIGH POINT – New orders for furniture rose 9% in August compared with the same month last year.

That’s according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from High Point accounting and consulting firm Smith Leonard.

The August order increase followed three straight months of 5% increases. New orders rose for 70% of the participants, up from 57% reporting increases last month.

Year to date, new orders were 6% ahead of the first eight months of 2017, and new orders increased for some 71% of the participants.

August shipments increased 5% from August 2017 levels, when shipments were 5% higher than August 2016. Some 68% of the participants reported increased shipments over August 2017, up slightly from last month.

“The increase in shipments over July was likely the result of the loss of shipments during the normal July 4-week shut down by most companies,” Smith Leonard Partner Ken Smith noted in the survey report.

Year to date, shipments 3% ahead of last year through August, when shipments were 5% higher than the first eight months of 2016. Some 61% of the participants said shipments decreased for the period.

Backlogs fell 4% from July levels as shipments in dollars exceeded new orders. August backlogs were 6% higher than August 2017 backlogs, up from a 4% increase reported last month.

Receivable levels increased 7% from August 2017 and 8% from July levels.

“The 8% increase over July levels was very much in line with the increase in shipments,” Smith said.

August inventories were even with July 2018 levels and up 4% from August last year.

“The 4% increase over last year was the same percentage increase as reported last month,” Smith said. “Inventory levels appear to be in good shape.”

Factory and warehouse payrolls rose 3% in August compared with the same month last year, the same as we reported last month. Payrolls increased 19% over July “as would be expected with the holiday week in July,” Smith said. “Overall, it appears that the level of factory and warehouse payrolls and numbers of employees remain in good shape considering current business conditions.”

In summary, Smith pointed out that August results steady growth throughout the last several months.

“While some conversations have discussed how business has slowed somewhat in the later part of the summer, the results of the survey have not shown that,” he said. “It was also nice to see that such a large percentage of our participants enjoyed some nice increases.”

Smith characterized the recent October High Point Market as “pretty good.”

“The attendance appeared to be down somewhat according to most folks we talked to,” he said. “That, for the most part, was blamed on the hurricane issues that decided to roll through town and parts of the South leading up to and including Thursday at market.”

The weather and tariffs were prevalent topics of conversation at October market.

“The consensus of the folks we talked to, seem to believe that the 10% would definitely stick at least in the near-term,” Smith said. “And that the 25% tariff would probably come into effect at the first of the year.

“As with what seems to happen most of the time in the industry, there is a lot of talk about who will have to do what, but for the most part, the industry finds a way to figure out how to deal with these kinds of issues. Most people we talk to privately agree that the industry could use some inflation in prices to begin with. We have said that for a long time. Unfortunately, we were not thinking caused by tariffs, but instead with better profits.”

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