Executive Summary

Our most recent survey of residential furniture manufacturers and distributors continued to have good results. New orders in June were up 6 percent over June of 2016 and were up 6 percent year-to-date. As with most of our surveys in recent years, the tide was not up for all boats.

New orders increased for approximately 60 percent of the participants for the month, up slightly from last month. Year-to-date, new orders were up for approximately 68 percent of the participants, up from 60 percent reporting last month.

Shipments in June 2017 were up 7 percent over June 2016 with year-to-date shipments up 5 percent for the first half of the year. Shipments for the month were up for some 83 percent of the participants, the highest percentage in quite some time.

For the six months, approximately 65 percent of the participants reported increases in shipments

Backlogs fell 4 percent from May as shipments exceeded new orders. Backlog comparison from June 2016 showed a 6 percent increase, down from 11 percent reported in the May to May comparison.

Receivable and inventory levels remained in good shape with receivables up 5 percent over June 2016 and inventory levels up 3 percent over June 2016. Both of the comparisons seemed to be very much in line based on shipment and order levels.

Both the number of factory and warehouse employees and their payroll levels also seemed very much in line based on order and shipment levels. The number of factory and warehouse employees actually fell 1 percent from May 2017 levels.

National

Housing

Existing-home sales dropped 1.3 percent for total existing home sales including single-family houses, condos, co-ops, and townhomes. The July pace was still 2.1 percent ahead of a year ago, but that was the lowest increase over the prior year in all of 2017. Single-family sales decreased 0.8 percent and were still 1.7 percent ahead of July 2016.

Regionally existing-home sales were down 14.5 percent in the Northeast and 5.3 percent in the Midwest while sales were up 2.2 percent in the South and 5.0 percent in the West. All four regions remained above July 2016.

Once again, the lack of inventory was blamed for the slowdown in sales. This lack of inventory is also blamed for driving up prices, which in turn is causing would be buyers to hold back. Listing in July typically went under contract in under 30 days for the fourth consecutive month.

New house sales were 9.4 percent below the June rate and were also 8.9 percent below July 2016. New house sales comparing July to July 2016 were down 13.5 percent in the Northeast, 12.7 percent in the Midwest and 11.7 percent in the South. Sales were up 1.4 percent in the West.

Part of the blame for sales being down was that housing starts continue to lag. Privately owned housing starts in July were 4.8 percent below June starts and 5.6 percent below July 2016. Single-family starts were up 10.9 percent over July 2016 offsetting some of the decline in multi-family starts. Single-family starts were up nicely in all four regions of the country.

Other

Retail and food service sales in July 2017 increased 0.6 percent from June and were 4.2 percent above July 2016. Retail trade sales were also up 0.6 percent and up 4.3 percent from July 2016. Sales at furniture and home furnishings stores were up 0.4 percent from June and up 5.6 percent from July 2016. Year-to-date, sales at these stores were up 3.8 percent.

The Consumer Price Index increased 0.1 percent from June. Over the last twelve months, the all items index rose 1.7 percent. The energy index was mixed with the food index and food at home and food away from home indexes increasing.

The Conference Board Leading Economic Index increased 0.3 percent in July, following a 0.6 percent increase in June and a 0.3 percent increase in May. The report noted that the July improvement suggests “the U.S. economy may experience further improvements in economic activity in the second half of the year.”

Consumer Confidence

The Conference Board Consumer Confidence Index^® continued to improve in August, up from July’s positive results. The Present Situation Index continued to “hover” at a 16-year high (now at 151.2 versus record July 2001, 151.3). The Expectations Index only improved marginally, though remained optimistic.

Thoughts

After a somewhat sluggish start to the year, following the kick we seemed to get after the election, our survey continues to show nice solid growth for the industry in the last four months. Certainly not everyone is participating but in general the results continue to be very positive.

Consumer Confidence remains at very high levels according to the Conference Board. After a nice run up, the stock market has pulled back a bit, but continues to be strong. While housing seemed to slow a bit, we need to keep in mind that year over year comparisons continue to rise, which gets harder as the prior year comparisons get higher and higher.

Retail sales in general continue to rise at over 4 percent in the year over year comparisons, again continuing to make it harder and harder to continue strong growth (especially in furniture where the inflation index shows the index for household furnishings declining). Yet according to the national reports, retail furniture and home furnishings stores continue to grow. Just like within our survey, we are sure that growth is not evenly across the board so that certainly has an impact on any one manufacturer or distributors growth, depending on who their customer is.

We hate to keep bringing this up, but we believe business in general is really pretty decent, but it is hard to feel that way when we have all the negative media news. Now not only Washington, but states and locals are full of it as well, with very little emphasis on all that is good.

We wish the folks in Texas all the best with all the terrible destruction caused by Harvey. One thing we are seeing that in spite of all the negative things happening, we are already seeing that Americans can really come together to help one another in times of crisis. Hats off to all of those who are helping from all across the nation.