New orders in March 2017 were up 12 percent over March 2016, according to our latest survey of residential furniture manufacturers and distributors. The good news was that some 77 percent of the participants reported increases. The March increase brought year-to-date increase to 4 percent, up from 2 percent through February. Last year, new orders were even with 2015 first quarter.
Shipments increased 6 percent with some 71 percent of the participants reporting increases. Shipments were up 17 percent over February, but some of that increase was likely due to more working days in the month. Last year, first quarter shipments were 2 percent higher than the first quarter of 2015.
Backlogs were up 8 percent over March 2016 due to the higher increase in orders.
Receivables and inventory levels appear to be in really good shape considering the overall business conditions. Factory and warehouse employees and payrolls also appeared to be in good shape with little change in the month.
April existing-home sales were down 2.3 percent with single-family home sales dipping 2.4 percent. Most of this decline was blamed on low supply levels.
Existing-home sales were down in all regions of the country except in the Midwest where they were up 3.8 percent. Year-to-date, single-family sales were up 3.6 percent over last year in the South and 3.5 percent up in the West. Sales versus last year were down in the Northeast and Midwest. In spite of the March decline, sales levels remain very strong.
New home sales in April were down 11.4 percent from March but remained 0.5 percent above April 2016. Compared to April 2016, sales were up 19.7 percent in the Midwest and 4.1 percent in the South while sales were down 5.1 percent in the Northeast and 13.7 percent in the West.
Housing starts in April fell slightly from March but were 0.7 percent ahead of April 2016. Regionally compared to April 2016, starts were up 7.3 percent in the South and 29.9 percent in the West while starts were down 16.4 percent in the Northeast and 0.8 percent in the Midwest.
U.S. retail and food services sales in April were up 0.4 percent over March 2017 and were up 4.5 percent over April 2016. The results for retail trade sales only were the same as overall. Sales at furniture and home furnishings stores were off slightly from March (0.5 percent) but were up 3.8 percent from April 2016. Year-to-date, sales at these stores were up 2.2 percent.
Consumer prices were up 0.2 percent in April. Over the 12 months ended April 2017, the all items index rose 2.2 percent. Much of this increase was due to the energy index. The 2.2 percent increase was larger than the 1.7 percent average annual increase over the past 10 years.
Nonfarm employment increased by 211,000 in April with the unemployment rate remaining at 4.4 percent.
The number of unemployed persons was at 7.1 million, about the same as last month.
The Leading Economic Indicators report noted that the positive outlook of consumers and financial markets continues to point to a growing economy.
The two consumer confidence reports differed slightly this month with the University of Michigan report slightly more positive than the Conference Board’s report. Neither report seemed to have significant changes but the Conference Board’s report did show a slight decline.
One quote from the University of Michigan report was very positive. It said “More consumers reported an improved financial situation in May than anytime in the past dozen years. The financial strength was due to gains in income as well as gains in household wealth driven by rising stock prices and home values.”
Though the reports on consumer confidence differed slightly, overall confidence remains very positive. Converting that confidence to more activity seems to be the trick. The March results of our survey were maybe a bit higher than we expected. Though most of what we had heard prior to the High Point Market had indicated that business had picked up. With over three-fourths of the participants reporting increases in orders, those expectations seemed to carry over into what we thought was a pretty good market.
In the next couple of weeks, we should start to know how good Market really was. The conversations we have had seem to be defined more as “ok” versus “good.” But at least, most are positive.
While the overall economic conditions in the U.S. continue to be a bit sluggish, the key factors continue to be somewhat strong. While housing is off a bit, the stock market has been very strong; inflation is not bad except for energy indexes and retail in general is positive, along with good consumer confidence. All of this together should continue to produce more furniture sales along the rest of the year.
We hope you had a great Memorial Day weekend. We owe those who have served and died for the country so much. We were glad to see that there were so many nice observances over the weekend.