HIGH POINT – September marked another boom month for the industry with new orders rising 43% compared with September 2019 according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard.

That came on the heels of a 51% increase in orders for August, 39% in July and 30% in June compared with the same months last year.

“The September increase was in line with expectations based on what we were hearing,” said Smith Leonard Partner Ken Smith, adding that 91% of survey participants reported order increases that month.

Year-to-date, new orders were 11% ahead of 2019’s first nine months of 2019, with some 56% of the participants reporting increased orders up from 34% reporting increases in August.

September shipments rose 4% from September 2019 levels following a 3% increase for August and up in September for 59% of surveyed companies.

“Year-to-date, shipments were down 10% compared with the same period a year ago,” Smith said. “But 22% of the participants reported increased shipments year-to-date, so that was a good sign for some.”

Backlogs, though, which skyrocketed 123% from September last year following a 103% increase in August, are a major issue.

“Clearly backlogs are up more than they need to be to satisfy retail needs, but no one was expecting the orders to continue to grow this fast,” Smith noted. “Getting workers is still a problem, and even the freight carriers are overloaded.”

September receivable levels were down 3% from the same month last year. “Shipments were up 4%, but with the year-to-date shipments down 10%, that decline makes some sense,” Smith said. “Most of the people we have talked to say that payments are pretty much being paid timely.”

Inventories were up 1% in September compared with August but were down 9% from September 2019 levels.

“Inventories have been depleted due to shutdowns of plants both foreign and domestic early on and production has just not been able to catch back up especially with orders coming in as fast as they are,” Smith said.

Factory and warehouse employment rose 2% in September from August but was still 5% below September 2019 levels. “Finding employees has been the major problem for most domestic producers and continues to be,” Smith said.

Factory and warehouse payrolls rose 13% from August but were 3% below last year, in line with the reduced number of employees. Year-to-date, payrolls fell 15% through September, down from 17% reported through August.

In summary, Smith said four straight months of outstanding order rates indicate the current business level goes beyond pent-up demand.

“We thought there would be pent-up demand, but who knew it would last this long,” Smith noted. “But as we have said before, we believe the good business is no longer pent-up demand but driven by consumers being home more, having more money to spend and spending it at home.”

Smith also hears that orders have remained very strong in October and November, “almaybe not quite at the same levels.”

“It seems that, assuming this potential ‘second wave’ of the pandemic does not shut everything down, business should stay pretty strong into 2021,” he continued.

The major challenge now is getting goods delivered to consumers. “Not only is there a shortage of domestic employees and certain raw materials, but also freight has become a major issue, with both shortages of containers as well as with domestic carriers, as there are also driver shortages,” Smith said. “All of this has caused backlogs to grow to uncomfortable levels.”

He added that consumers face the same frustration with other goods such as appliances.

“When you are quoted six-week delivery for a washing machine and you finally receive it in about 15 weeks, the frustration is there as well,” Smith said. “In the old days at the high end, you were told you might get your high-end case goods in three months. But as long as you delivered when you said you would, it was OK. That all changed when delivery times were shortened even in lower price goods. But it looks like consumers might need to be told realistic times for deliveries in hopes that they are not disappointed and still look forward to getting their products.”

Click here for the entire Furniture Insights survey report.

The post Furniture Insights: New orders up 43% in Sept. appeared first on Furniture Today.

Translate »
0
Your Cart