Executive Summary
According to our latest survey of residential furniture manufacturers and distributors, new orders in November 2017 increased 11% over new orders in November 2016. This increase followed an 8% increase reported last month, when we wondered if maybe High Point Market dates may have had an impact. The November to November increase was also good as last year November 2016 new orders were 8% higher than November 2015 results.
Year to date, new orders are up 5% over the same period a year ago. Last year through November, new orders were up 3% over the previous year. Year to date, new orders were up for some 69% of the participants.
Shipments were up 4% over November 2016 following an 8% increase reported last month. Shipments remained 5% ahead of last year for year to date. Some two-thirds of the participants reported increased shipments year to date.
Backlogs increased 6% over October as new order dollars exceeded shipping dollars. November backlogs were 1% higher than November 2016.
Receivable and inventory levels were well within expectations considering current business conditions. In addition, factory and warehouse payrolls and number of employees remained at very reasonable levels with payrolls up 2% year to date.
National
Consumer Confidence
The Conference Board Consumer Confidence Index increased slightly in January following a decline in December. Consumers assessment of current conditions decreased slightly but remained at historically strong levels. Expectations improved and most felt that the solid pace of growth in 2017 will continue into 2018.
Consumer optimism about the short term improved following a decline in December. The outlook for the job market was less negative. Regarding short term income prospects, the percentage expecting improvement decreased but those expecting a decrease in income also declined.
The University of Michigan Survey of Consumers was down slightly but for the most part was basically unchanged. The slight decline was somewhat affected by the tax reforms and some doubts as to the impact on consumers.
Housing
Existing-home sales fell slightly in December in most of the country but for the year, edged up 1.1%. These results made 2017 the best year for sales in 11 years. Single-family homes also fell in December some 2.6% but ended the year 1% above the 2016 pace. The median existing-home sales price was $248,100, up 5.8% from December 2016.
For the year, sales of existing homes were up 1.5% in the Midwest and 3.1% in the South, but were down 2.6% in the Northeast and 0.8% in the West.
New home sales also fell in December but were 14.8% above December 2016 sales. For the December to December comparison, sales were up 10.8% in the Northeast, 15.7% in the South and 18.8% in the West. Sales were down 3.1% in the Midwest. For the year, sales of new homes were up 8.3% over 2016.
Housing starts were off in December in total though starts were up in all regions except the Northeast where they were off 19.0%.
Other
The advance estimate of Gross Domestic Product for the 4th quarter of 2017 reported an expected increase of 2.6%, down slightly from 3.2% for the third quarter. The Conference Board’s Leading Economic Index also increased 0.6% following an increase of 0.5% in November and a 1.3% increase in October.
The advance report in U.S. retail and food services sales increased 0.4% in December over November and sales increased 5.4% over December 2016. Sales at furniture and home furnishings stores were up 9.9% over December 2016 and up 4.8% year to date.
The Consumer Price Index for all Urban Consumers (CPI-U) increased 0.1% in December and increased 2.1% for all items in the last 12 months. The index for all items less food and energy increased 1.8% with food up 1.6% and energy up 6.9%.
The employment rates held steady in December adding 148,000 jobs. The unemployment rate was unchanged at 4.1%.
Thoughts
The November results of our survey continued to bring favorable news, with orders up nicely and shipments following along. Year to date results continue to show nice steady growth. While not robust, the growth rate is a pretty good pace. While still not good for all participants, those experiencing declines for the most part are at levels that can be dealt with.
The retail results from national reports continue to show nice steady growth as well. As with our participants, from what we hear from conversations, the steady growth is not necessarily across the board, but at least, overall, the results are favorable.
As usual with this time of year, we will see weather affecting results for another month or so. Since December and January have been fairly rough in many areas of the country along with the issues in California, let’s hope February and March are not too harsh so that the steady growth we were seeing through November can continue.
