Sales of residential furniture remained stable throughout 2016 and are hoped to improve this year – if the economy continues to strengthen and consumers can shake off their post-recession jitters.
“With housing, the stock market, inflation, employment and consumer confidence all positive, the industry probably should be doing better,” says Kenneth D. Smith, partner with the Smith Leonard accounting and consulting firm, which assembles the monthly survey of U.S. residential furniture manufacturers and distributors.
“We continue to believe spending habits have also changed since the recession. While most economists do not expect a recession like the recent one, many people may just not be ready to not believe it could happen,” he adds.
In spite of that, he sees strong consumer confidence, along with the other positives – such as a housing sector that appears to be showing continued strength – leading to decent growth in 2017 for the industry.
Consumers’ appraisal of current conditions improved considerably in March, Smith notes. Consumer surveys also show them significantly more optimistic about the short-term outlook, expecting business conditions to improve over the next six months.
Consumers’ outlook for the labor market also improved in March, as did their overall expectations that their incomes will rise this year.
Overall retail sales were up 0.1% from January and up 5.4% from February 2016. Sales at furniture and home furnishings stores were up 0.7% over January and increased 4.9% over February 2016. For those two months, sales at retail stores were up 2.1%.
New orders in January – the most recent month for which numbers are available — were basically flat compared to January 2016 orders but were 2% higher than January 2015, Smith Leonard reports.
Just over half of survey participants reported increased orders. These results followed two good months of November and December 2016 when orders were up 8% and 11%, respectively.
Shipments in January 2017 were 2% higher than January 2016 shipments. Last year’s January shipments were 2% higher than they were in January 2015.
Shipments in January 2017 increased for about 52% of the participants, similar to the increase in orders.
Receivable levels increased 3% from January 2016 with shipments up 2%, so these levels seem to be very much in line with the history of this data, Smith points out.
Part of this result was probably due to the high level of shipments in December with some of those collections not made by the end of January, he believes, concluding that, “Overall, receivable levels appear to be in good shape.”
Keep an Eye on Inventories
Inventories were 3% up from December but down 3% from January 2016. “We believe the 3% increase from December is likely a result of some timing issues,” Smith says.
“From what we can tell, most are trying hard to keep inventory levels under control,” he adds. “Overall, inventories seem in line, but in most cases probably need to be watched.”
The number of factory and warehouse employees were up 1% from December but were down 2% compared to January 2016. In December the number of employees was down 1% from a year ago, so all of these results seem to be in line with what can be expected, Smith says.
Factory and warehouse payrolls were up 6% in January compared to last year, but the increase represents a fall from the 9% rise in December.