Executive Summary

Following a 14 percent increase in new orders in September 2016 versus September 2015, the results of our latest survey of residential furniture manufacturers and distributors fell back in line with expectations based on most conversations we were hearing in October. October 2016 new orders were up 1 percent over October 2015. October 2015 orders were 1 percent higher than 2014. Year-to-date, new orders remained 2 percent higher than the same period a year ago.

The results for October were very mixed. Less than one-half of the participants reported increased order rates with several participants reporting double digit declines in orders.

Shipments in October fell 6 percent from October 2015 when they were 7 percent higher than October 2014. This brought year-to-date shipments back to even with the first 10 months of 2015. As with orders, the results were very mixed with considerably less than one-half of the participants reporting increased shipments.

Receivable levels increased 2 percent over last October. With shipments for the month down from last year, this increase was a bit odd but with year-to-date shipments flat, the small increase doesn’t appear to be too far out of line.

Inventories fell 2 percent from last October and were flat with September 2016. Overall, inventories seem very much in line with current conditions.

Housing

November housing results were again positive. Total existing home sales in November were up a seasonally adjusted annual rate of 0.7 percent over October and 15.4 percent higher than November 2015. According to the report, November’s sales pace was the highest since February 2007.

Single-family sales fell slightly from October but were still 16.2 percent higher than November 2015 with the median price for these sales up 6.8 percent over November 2015.

Housing starts fell with single-family starts down 4.1 percent from October 2016. Single-family starts were down in the Northeast and West but were up in the South and Midwest.

Other

Moving from October to November, as with housing, other reports were positive as well. Advance estimates for retail and food services sales were up 0.1 percent from October and 3.8 percent over November 2015. Retail trade sales were up 3.6 percent over last year. Sales at furniture and home furnishings stores were up 4.1 percent over November 2015 and were up 3.9 percent year-to-date.

The Consumer Price Index increased 0.2 percent in November with shelter and gasoline indexes leading the increase. Over the last 12 months, the all items index increased 1.7 percent.

Nonfarm payroll employment rose by 178,000 in November. The unemployment rate fell to 4.6 percent from 4.9 percent reported last month. Employment gains occurred in professional and business services and in health care.

Consumer Confidence

The University of Michigan Surveys of Consumers report was one of the most positive in some time. The report said “As unexpected as Trump’s election, consumers expressed much more positive economic expectations following his victory.” The report placed the Consumer Sentiment Index at 98.2, the highest level since January 2004. It is worth reading to excerpts from the full report in the body of this month’s full report.

While not quite as positive as the University of Michigan report, The Conference Board Consumer Confidence Index gained ground in December after another gain in November. The Expectations Index improved to 105.5 from 94.4 while the Present Situation Index fell slightly.

Lynn Franco, Director of Economic Indicators said “The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices, which reached a 13-year high, was most pronounced among older consumers.

Thoughts

Many of the folks we have talked with have said that business seemed to really pick up after the election. This has been true in conversations outside the industry as well. Certainly not true for everyone, but there has clearly been some optimism since the election. Not to try to be political, most seem to feel that the fact that it is over was as important as who may have won.

One Final Thought

In an August 2016 Furniture Today “Opinion Today” by Cindy Hodnett, she said “should a sofa – used every day by most members of a household for years –cost less than a cell phone?” Just something to think about as we keep trying to go low in too many cases.

With that said, here’s wishing all of you a very happy, prosperous and safe 2017.