Executive Summary

New orders in February 2018 were 5% higher than orders in February 2017, according to our latest survey of residential furniture manufacturers and distributors. February 2017 orders were 4% higher than February 2016. Orders in February were up for one-half of the participants so most of those that had increased orders were up nicely.

The February increase brought year to date orders to an increase of 4%. Year to date, last year through February orders were 2% higher than the previous year. Approximately 64% of the participants reported increased orders year to date.

Shipments were up 3% over February a year ago and up 1% year to date. Last year for the two months, shipments were up 3% over the previous year. Approximately 52% of the participants were up year to date.

Backlogs increased 2% over January as order dollars exceeded shipment dollars. Backlogs were 2% lower than February 2017.

Receivable levels were in good shape considering shipment results but inventories appear out of line with an increase of 10% over last year in spite of a 2% decline from last month. Inventories will need to be watched if business does not pick up.

Both factory and warehouse payrolls and employee levels appear to be in line with current business conditions.

National

Consumer Confidence

The Conference Board Consumer Confidence Index increased slightly in April following slight decrease in March. The Index increased to 128.7 from 127.0 in March. The Present Situation Index increased to 159.6 from 158.1 while the Expectations Index improved to 108.1 from 106.2 last month.

The report indicated “Overall, confidence levels remain strong and suggest that the economy will continue expanding at a solid pace in the months ahead.”

As was the case last month, the University of Michigan Surveys of consumers had a different result. Their Index of Consumer Sentiment fell from 101.4 to 97.8 with both the current conditions and expectations indexes falling. The report noted that confidence remains relatively high but dropped mainly due to concerns about the potential impact of Trump’s trade policies on the domestic economy.

Housing

Existing-home sales grew for the second consecutive month in March, but remained curtailed due to low inventory levels and higher prices. Single-family home sales rose 0.6% but were 1% below March 2017.

Regionally, sales increased 6.3% in the Northeast and 5.7% in the Midwest. Sales declined 0.4% in the South and 3.1% in the West. Interestingly, sales in the Northeast and Midwest were still below a year ago while sales in the South and West were up from a year ago.

Sales of new single-family houses in March were 4.0 above February sales and were up 8.8% above March 2017. Regionally compared to March 2017, sales were up 10.4% in the South and 24.7% in the West, while sales declined 52.5% in the Northeast and 2.4% in the Midwest.

Privately-owned housing starts in March were up 1.9% from February and up 10.9% from March 2017. Starts were up in the Midwest and West while falling in the South and Northeast.

Other

The Conference Board’s Leading Economic Index (LEI) for the U.S. increased 0.3% to 109.0 in March following an increase of 0.7% in February and 0.8% in January. The report stated, “The U.S. LEI increased in March, and while the monthly gain is slower than in previous months, its six month growth rate increased further and points to solid growth in the U.S. economy for the rest of the year.”

The advance reports on retail and food services for March 2018 indicated a 0.6% increase over February and 4.5% above March 2017. Sales at furniture and home furnishings stores were up 3.9% over March 2017 and up 4.9% year to date.

The Consumer Price Index for all Urban Consumers (CPI-U) decreased 0.1% in March after a 0.2% increase in February. For the last 12 months, the all items index rose 2.4%. The primary reasons for the increase were due to a 7.0% increase in the energy index and the food index increased 1.3%.

Non-farm payroll employment edged up 103,000 in March. The unemployment rate remained at 4.1%.

Thoughts

In March, weather continued to have negative impacts on industry retail sales but the increase in orders for manufacturers and distributors for the two months has been steady. Even April weather has not been spring-like for much of the nation.

We were pleasantly surprised at the mood of folks attending the April High Point Market. All of the exhibitors we talked to were very pleased with their results. In addition, the parking lots were full as well as the buses, especially those moving us around the downtown area. Except for one evening, the weather was great and as usual, the major players were here as well as other dealers and designers.

We heard several folks saying it was one of the best markets in years. One veteran told us it was his best market ever and he has been coming many years so he knows history.

With consumer confidence still strong and the economy continuing to improve, we think business should remain steady for some time. The stock market needs to settle down some as it seems to move quickly on any small tidbit of news. We think that uncertainty along with so much negative news everywhere from the media keeps people a bit uncertain.

Yet business overall, while not always great, has been fairly steady. While not every week or month, overall the industry continues to improve. But as we noted at market, this industry does not have one business model. This market really proved that to us.