HIGH POINT – According to Smith Leonard’s most recent Furniture Insights report, new furniture orders decreased 9% in September compared to the same month last year, extending a downward trend that started in May.
Orders are already equal with 2023 after a robust start to the year. The good news is that orders increased by 5% from August, which was a 12% increase from July.
Sixty-three percent of poll respondents reported lower September orders than the previous year. The month’s shipments were 7% lower than both last month and last year. Shipments so far this year are 8% lower than in 2023.
Backlogs for September were up 1% from the previous month but down 10% from the previous year. Levels of receivables decreased 1% from August and 8% from September of last year. According to Smith Leonard, both are substantially consistent with their respective shipment trends.
Although they are down 5% from 2023, inventories and employee/payroll levels are also materially in line with recent months, “indicating that companies have aligned levels to match current operations.”
Smith Leonard assurance partner Mark Laferriere provided some general observations:
“Although new residential housing activity continues to lag behind, we saw a few national economic indicators trending in the right direction this month, particularly in consumer confidence and existing-home sales,” he said. We continue to observe a decrease in current orders and shipments for survey respondents compared to a year ago, so these improvements will need to be maintained in order to have a significant impact on the furniture sector. However, a look at the performance of recent public companies gives some hope that, on average, the year-over-year decreases have decreased in their most recent quarterly filings.
Although online sales offset the decline at physical stores, early Black Friday reporting shows that overall activity was up.
The 0.50% interest rate drop in September was followed by another 0.25% cut in November. It will be interesting to watch how the Fed handles potential tariffs and their likely effects on inflation, future interest rate changes, and eventually housing, which is the main driver of industry activity, when they meet again in mid-December.
“There is still little doubt that tariffs will be disruptive to the entire industry, providing both challenges and opportunities, even though we have seen the majority of our clients significantly reduce their reliance on China-produced goods over the past 10 to 15 years.”
