Monthly survey of furniture business

January 2010 new orders were positive again compared to January 2009, according to our latest survey of residential furniture manufacturers and distributors. While not quite as positive as the November and December results, at least they were positive, showing a 4 percent increase over January 2009. January 2009 new orders were 24 percent lower than January 2008.

While the results were not all that great, the 4 percent increase followed a 12 percent increase in December and 10 percent in November and a flat October in year over year comparisons. We believe January results were negatively impacted by bad weather in January and we expect February results to also be affected. This was a terrible winter weather-wise, especially in the Mid Atlantic and Northeast sections of the country.

Some 59 percent of the participants reported increased orders down slightly from 62 percent in December. The 59 percent is still a long way from 20 percent of the participants in August. 

Shipments and Backlogs 

Shipments in January were 6 percent higher than January 2009, following a 3 percent increase in December. While shipments were down 24 percent in January 2009 versus January 2008, remember that December’s increase in shipments was the first increase in shipments since June 2006. 
  
Shipments in January were 10 percent lower than December 2009, but that was somewhat normal in the January to December comparisons. Approximately 62 percent of the participants reported increased shipments in January up from approximately 50 percent in December. 

Backlogs were 4 percent higher than December and 26 percent higher than January 2009. This was the fourth month in a row that backlogs have increased over the prior year. We realize that some of this relates to imports and the time it takes to get through the system, but it is good to see backlogs increasing at least somewhat. 

Receivables and Inventories

Receivables were 4 percent lower than January 2009 even with shipments increasing 6 percent in January. Receivables increased 1 percent over December in spite of a 10 percent decline in shipments.

We continue to hear about slower paying customers, but we are also hearing more about requiring deposits, especially in the custom order business. We did have a few bankruptcies and going out of business situations in 2009. Hopefully, no more significant ones are on the horizon.

Inventories increased 10 percent over December 2009 but were still 21 percent lower than January 2009. A number of companies took some down time in December and many did not accept new inventory until after the first of the year. We continue to believe that inventories are in pretty good shape, especially after the last two years of heavy discounting in order to move slow moving and obsolete items.

In addition, we have noted that companies are keeping a close eye on raw materials, for those who are still manufacturing. 

Factory and Warehouse Employees and Payrolls

Factory and warehouse payrolls were 6 percent lower than January 2009 when they were down 25 percent from January 2008. Payrolls were down 21 percent from December, but most of that, we believe, related to year end bonuses and vacation pay.

The number of factory and warehouse employees was also down 6 percent from January 2009, when they were down 17 percent from the year before. The number of employees was actually up 3 percent from December 2009. 

National 

Consumer Confidence

According to the Conference Board, the Consumer Confidence Index®, which had decreased in February, rebounded in March. The Index now stands at 52.5 (1985=100), up from 46.4 in February. The Present Situation Index increased to 26.0 from 21.7. The Expectations Index improved to 70.2 from 62.9 last month.

Lynn Franco, Director of The Conference Board Consumer Research Center said: “Consumer Confidence, which had declined sharply in February, managed to recoup most of the loss in March. However, despite this month’s increase, consumers continue to express concern about current business and labor market conditions. And, their outlook for the next six months is still rather pessimistic. Overall, consumer confidence levels have not changed significantly since last spring.”