by Furniture shipments were down 17% from last year, with 2022 results reflecting the impact of high backlogs in 2020 and 2021
HIGH POINT — New orders for residential furniture in August were up 29% over August 2022, according to the latest survey of residential furniture manufacturers by Smith Leonard. Meanwhile year-over-year shipments were down 17% from 2022, reflecting high backlogs in 2020 and 2021, the report said.
According to the firm’s latest Furniture Insights report, new orders totaled $2.6 billion in August, up from $2.03 billion in August 2022, with increases reported for some 72% of participants. The report noted, however, that the comparison “is not quite as rosy as it might seem as new orders in August 2022 were down 14% from August 2021 and August 2021 orders were down 34% from August 2020. So as has been the case for the past couple of years, the comparisons can be misleading without context.”
It also noted that the impact for price increases and more recently price decreases for foreign freight charges further distort the picture. Year to date, orders totaled $17.8 billion, level with orders the same period in 2022, and up for about 40% of survey participants. It went on to state that year-to-date new orders were down 29% in 2022 compared to 2021, when they were up 29% from 2020.
“New orders from June 2020 up until later that year were at historically high levels as demand was at unheard-of levels,” the report went on to state. “The August increase brought order levels year to date back to just about even with the same period of 2022.”
Compared to July, new orders in August were up 12.6%, to $2.6 billion, from $2.32 billion.
Shipments in August totaled $2.4 billion, compared to $2.92 billion in August 2022, and were down for 72% of participants. They were down 18% year to date, falling to $19.4 billion, from $23.5 billion the same period in 2022. In 2022, year-to-date shipments were up 6% from 2021, the report noted, while year-to-date shipments in 2021 were up 34% over the same period in 2020.
“Shipment results are also confusing as backlogs have been built up so high, then as orders began to slow, shipments could be maintained by shipping from the large backlogs,” the report said. “The shipments comparisons will remain difficult for a while as many have brought their backlogs down to historical levels.”
The report also noted that August shipments were up over 34% compared to just over $2 billion in July, which it attributed to normal July industry shutdowns for vacations.
Backlogs totaled $2.7 billion in August, compared to $5.4 billion in August 2022, and were also down from just over $3 billion in July.
Other highlights of the report were as follows:
+ Receivable levels were down 30% from October 2022. “With year-to-date and even monthly sales down in the 17%-18% range, the decline in receivables appears out of line,” the report said. “But we believe that many of our participants in the upholstery business tend to report their receivables net of customer deposits. As backlogs have been declining, the amount of customer deposits has also declined, which would make the change in net receivables appear to be higher.” It added that as backlogs continue to return to normal levels, “we think the receivable results should get back in line.”
+ Inventory levels in August fell 32% from August 2022 and were down 2% from July. “It appears that inventories are much more in line with current business levels after the large buildups over the last couple of years.”
+ The number of employees was down 8% from August 2022 and even with July, the report said, while payrolls were down 11% from last August and down 8% year to date despite wage increases over the last couple of years. “Factory and warehouse labor results continue to seem in line with current business conditions,” the report said.
