New-order growth for residential furniture continued to slow in August, rising 1 percent over August 2009, when orders were off 12 percent from the prior year.
That's according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.
Year-to-date, new orders rose 8 percent over the first eight months of 2009, down from a 9 percent increase over the prior-year-to-date level reported in July. At this time last year, new orders were 19 percent lower than the same period a year ago.
"The results were in line with most of what we had heard on the street," said Smith Leonard Managing Partner Ken Smith.
August shipments rose 11 percent from the same month last year, when they were down 18 percent from August 2008.
"With orders showing a smaller increase, these shipments were to a degree out of backlogs," Smith said. "We suspect that some of this increase related to finally receiving some product that was ordered at the April market. Approximately 68 percent of the participants reported increased shipments, up slightly from last month.
Year-to-date shipments as of August were 9 percent higher than at the same period a year ago, up slightly from July results. In 2009, shipments year-to-date through eight months were off 20 percent from 2008.
With shipments higher than orders, backlogs fell 6 percent from July but remained 18 percent higher than August 2009. This compares to increases of 40 percent reported in May, 35 percent in June and 27 percent in July.
"One person told me that his backlogs were getting too high, which worried him from a customer service standpoint," Smith said. "Then he noted that now that they are down, backlogs sure felt better when he had them."
August receivables were 15 percent higher than in August 2009, up from a 12 percent increase reported in July. Receivables were 6 percent higher than July 2010.
"The increases would be expected with the increase in shipments, though we continue to hear of extended terms either given or taken by dealers," Smith said.
Inventories were 14 percent higher than August 2009, up from a 6 percent increase last month.
"Some of this, we believe, resulted from imported goods coming into warehouses from previous orders," Smith said. "More may have resulted from manufacturers and distributors ordering more based on earlier increases in orders, but with new orders slowing, inventories increased."
