HIGH POINT – New residential furniture orders fell 3% in May from the same time last year, marking just their second decline in 12 months, according to the latest Furniture Insights report from Smith Leonard. But with this past April seeing a 22% increase over April 2023, May’s decline may indicate a normalization, the accounting firm said.
Despite the decline, furniture orders are still 6% up year to date. New orders for the month were flat compared with last month, which in-turn, were flat from March.
Shipments were again materially in line compared with last year, with May 2024 down 4% from May 2023 (had been up 2% in April), and flat compared with April 2024. Year to date through May 2024, shipments are down 8% from last year.
May 2024 backlogs were down 6% compared with May 2023 and down 1% from last month. Receivable levels were down 6% from May 2023, which is materially in line with shipments for the same period and year to date 2024.
Inventories and employee levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations.
Smith Leonard assurance partner Mark Laferriere gave his overall thoughts:
“There was certainly no shortage of interesting storylines since last month, with a high-profile retail bankruptcy, ocean freight concerns, interest rate cuts on the horizon and changes to the political landscape here in the States, among other things.
“The Conn’s/Badcock bankruptcy is another reminder of the shifting landscape within the industry and that business continues to be tough at retail, while also highlighting the need for companies to pursue multiple sales channels to mitigate risk, whether that be with designers, e-commerce, etc. However, we also see others expanding operations and opening new stores, so retail is certainly not dead.”
Laferriere noted that ocean container rates, “while higher than we’d prefer,” have probably peaked and are expected to decline through the rest of 2024. Recently, the World Container Index shows that spot rates decreased 1% over all last week.
He also noted that in July, the Fed indicated the possibility of a potentatial rate cut at its Sept. 17-18 meeting, if inflation continues to ease, with additional cuts possible next year.
“Overall, the national economic indicators we track are again ‘mixed’ in June/July 2024 with little meaningful change compared to recent months, but the general consensus appears to be that consumers are cautiously optimistic, but anxious about what the future holds,” Laferriere said.
“Looking at our monthly stats for the past few months, it’s probably worth noting that new orders, shipments and backlog have pretty much stayed within a 0-5% range for our participants, which if nothing else, provides companies with some stability with which to manage operations until these other factors work themselves out.”