HIGH POINT – New residential furniture orders rose for 72% of surveyed furniture manufacturers and retailers in September over the same period last year, according to accounting firm Smith Leonard. The total combined value of all orders also rose by the dollar by 13%. New orders also rose from August, although just slightly. Year to date, new orders for the first nine months were up about 1%.
But once again, these numbers require more background. In September 2022, orders were down 16% from 2021, making it hard to make worthwhile comparisons. Shipments were down 20% this September from 2022, while being down 18% year-to-date. Shipment comparisons also are difficult to deal with, Smith Leonard says, as 2020 shipments were up significantly, setting the bar very high. Overall, shipments in dollars are ahead for the year over order dollars.
“All of this means that shipments have continued to pull from the backlogs,” said Ken Smith, Smith Leonard founding partner. “Plus, the increase in shipments in 2022 was also so large due to the extremely high backlogs, the comparisons of 2023 to ’22 are not what we would normally expect. Hopefully, all of that is confusing enough.”
Backlogs actually increased a bit over August but were down 43% from September 2022. It appears that backlogs are getting to something closer to pre-pandemic levels, Smith said, “if one can determine how much price increases are included in the numbers.”
“In spite of the difficulty of making sense of the results of our surveys, we think the current business levels in residential furniture are back from the unprecedented heights we saw post the start of the COVID pandemic,” Smith said. “Everyone is not in the same place, as some still have some backlogs to work down for a part of 2024 shipments, but most seem back to more normal delivery times.
“Incoming business seems slower, and some would call it spotty, giving you the feeling from time to time that business is starting to level out to more normal levels, and then it slows down again,” he continued. “All the national economic news, for the most part, continues to say that we are still going to have at least a mild recession, if there is such a thing. Some of you have said your company is already in one.
“We need to get the economy a bit more stable and get interest rates back down some. We just heard a report that said that used car prices are up 30% from pre-pandemic levels and that the average car payment today is over $700 a month. That will surely not leave many dollars for furniture purchases,” Smith added. “High mortgage rates are also hurting home buyers along with the shortage of inventory. The Conference Board projects that real GDP will respond by just 0.8% in 2024. With all of this, we would suggest that it may be a while before we see the furniture business back to more ‘normal’ levels.”