Orders, Shipments Fall Again in October
January 5, 2009
New orders for furniture from retailers fell 28 percent during October 2008 compared with the same month in 2007, and shipments dropped 20 percent for the same time frame, according to the latest survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.
Ninety-four percent of survey respondents said orders dropped in October, while 89 percent reported lower year-to-date orders. October's new orders also dropped 13 percent from September, while shipments were down 8 percent.
Year-to-date, shipments for the first 10 months were 11 percent below last year. In October 2007, shipments year-to-date were down 5 percent from the previous year. With orders less than shipments, backlogs in October fell 3 percent from September. October 2008 backlogs were 24 percent lower than October 2007 levels.
Receivable levels in October 2008 were 11 percent below October 2007 levels, the same decline as in September.
"The concern is that receivables were up 1 percent over September levels even with shipments declining 8 percent," wrote Ken Smith in Smith Leonard's Furniture Insights newsletter. "Since receivables were reasonably in line last month, the change may relate to timing of invoicing, but we have heard recently that payments tend to be slowing down."
Inventories levels in October were 4 percent below October 2007, again the same decline as reported in September. Inventory levels also declined 1 percent compared to September 2008 levels.
"With orders and shipments down double digits, it's at least good to see that inventories are not growing," Smith said.
Factory payrolls were 24 percent lower in October 2008 compared to October 2007 and were 9 percent lower than September payrolls. The number of factory employees was 15 percent lower than October 2007, versus 13 percent reported in September.
Through October, factory payrolls were 13 percent lower than the first 10 months of 2007.
"It appears that companies are using shorter-hour work weeks to help offset the decline in orders," Smith said.
Smith does not expect the results for November and December to be much different from the October results.
"We have now technically been in a recession for a year," Smith said. "Typically, the longer ones last about 18 months. The question is: Is this a typical recession? We think not. There are lots of things that need to happen before consumers begin to show confidence again."
Before that happens, Smith said, job losses need to stop, and the housing market needs to hit bottom.
"We hope that some of the government programs that have been started and those talked about will help to settle things down," he said. "It will be interesting to see what impact they have.
Ninety-four percent of survey respondents said orders dropped in October, while 89 percent reported lower year-to-date orders. October's new orders also dropped 13 percent from September, while shipments were down 8 percent.
Year-to-date, shipments for the first 10 months were 11 percent below last year. In October 2007, shipments year-to-date were down 5 percent from the previous year. With orders less than shipments, backlogs in October fell 3 percent from September. October 2008 backlogs were 24 percent lower than October 2007 levels.
Receivable levels in October 2008 were 11 percent below October 2007 levels, the same decline as in September.
"The concern is that receivables were up 1 percent over September levels even with shipments declining 8 percent," wrote Ken Smith in Smith Leonard's Furniture Insights newsletter. "Since receivables were reasonably in line last month, the change may relate to timing of invoicing, but we have heard recently that payments tend to be slowing down."
Inventories levels in October were 4 percent below October 2007, again the same decline as reported in September. Inventory levels also declined 1 percent compared to September 2008 levels.
"With orders and shipments down double digits, it's at least good to see that inventories are not growing," Smith said.
Factory payrolls were 24 percent lower in October 2008 compared to October 2007 and were 9 percent lower than September payrolls. The number of factory employees was 15 percent lower than October 2007, versus 13 percent reported in September.
Through October, factory payrolls were 13 percent lower than the first 10 months of 2007.
"It appears that companies are using shorter-hour work weeks to help offset the decline in orders," Smith said.
Smith does not expect the results for November and December to be much different from the October results.
"We have now technically been in a recession for a year," Smith said. "Typically, the longer ones last about 18 months. The question is: Is this a typical recession? We think not. There are lots of things that need to happen before consumers begin to show confidence again."
Before that happens, Smith said, job losses need to stop, and the housing market needs to hit bottom.
"We hope that some of the government programs that have been started and those talked about will help to settle things down," he said. "It will be interesting to see what impact they have.
