HIGH POINT – New orders for furniture remained strong in May, growing 47% compared with the same month last year, according to the latest Furniture Insights survey of residential manufacturers and distributors from accounting and consulting firm Smith Leonard.
“The results of our latest survey continue to show year over year strong growth as the comparisons are starting to reflect the beginnings of business coming back beginning in May 2020,” said Smith Leonard Partner Ken Smith in the report, noting 91% of surveyed companies logged order increases in May. “Year to date, new orders were up 67% over the first five months of 2020. Going back to more normal times, we compared the new orders year to date for 2021 to that of 2019. That comparison showed that new orders were up approximately 36% over that period, the same as we reported last month for the April year to date results. So, these results really seem to show that business has been as good as it seems.”
May shipments rose 64% compared with May 2020 as vendors kept ramping up and began shipping from backlogs. “This increase brought the year-to-date results to an increase of 43%,” Smith said. “The year-to-date results showed an increase of 17% over year-to-date 2019 results.”
Backlogs continued to rise, up 214% compared with May 2020 and up another 3% from April levels.
“Most manufacturers are showing delivery dates of about three months to as much as six months from what we have heard,” Smith noted. “Distributors are having the same issues as many of the Asian companies have been shut down or slowed due to the COVID-19 as well.”
Receivable levels were in line with shipments, increasing 50% from May last year. Smith pointed out that with current backlog levels, “most credit departments are making sure customers are current with older orders before taking any new orders.”
May inventories rose 8% from April and were 40% ahead of May 2020 levels. “These increases seem to be very much in line with current orders, if not maybe still a little low, but there are issues in acquiring raw materials, as well as container shipments being held up, among other reasons,” Smith said.
Factory and warehouse employment was flat compared with April and up 7% comparing May last year.
“This comparison is a bit tougher to do as so many companies who got Paycheck Protection Program monies kept employees on the payroll last year in order to have the loans forgiven due to the rules relating to forgiveness,” Smith said.
Payrolls increased 52% as factory and warehouse employees were brought back on board, and were up 27% year-to-date through May.
In summary, Smith said the industry continues to experience “ a strange duality” of increased orders while mired in backlogs due to labor and supply issues.
“We traveled through Hickory, N.C., in the last couple of days, and signs for help were everywhere, many of which were clearly advertising their increased hourly rates,” Smith pointed out, adding that while foam shortages appear to be “easing some,” issues remain with wood, plywood, metal and some fabrics.
“For importers, certain problems continue and some are very real issues. COVID has hit several countries very hard,” Smith said. “Most recently, several facilities in Vietnam have been shut down for periods of time including several furniture facilities. In addition, container shortages, extreme price increases for containers (if you can get one), and continued issues at the ports create significant issues for importers.”
He added that manufacturers and importers alike face trucking and freight issues stateside.
“Significant pricing issues persist, and prices have had to go up through regular price increases as well as surcharges for items such as freight that hopefully will level off again at some point,” Smith said. “We’re intrigued that the consumer price index report noted that indexes for several items were up substantially, but household furnishings and a couple of other indexes were among the few component indexes that decreased. But there is a lot of talk about inflation in general with the fears that it could cause a slowdown in the economy. As with all other economic news, we struggle to determine media hype from reality.”
Click the following link for the full Furniture Insights report.
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August 03, 2021 at 04:01AM
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Furniture Insights: May orders up 47% - Furniture Today
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