Executive Summary

We have continued to hear about business being slower and our survey results backed up those conversations for April. New orders in April were down 9% from April 2018 as only 36% of the participants reported increased orders in April. Since the April 2019 High Point Market was one week earlier in 2019 versus 2018, we do not believe the timing of market had much to do with April results.

Year to date, new orders were 3% lower than the same period a year ago, down from flat reported for the first quarter. Year to date, new orders were down for 64% of the participants.

Shipments were down 2% from April 2018, down for 55% of participants. Year to date, shipments were up 2%, but only 48% reported increased year to date shipments. Backlogs remained even with March as dollar amounts of orders and shipments were about the same.

Receivable levels were 3% higher than April 2018 somewhat in line with year to date shipments even though not in line with the month to month comparison. Inventory levels remained high compared to current business levels. These need watching if order levels remain down.

Factory and warehouse employee and payroll levels seem to be in line with the number of employees down 1% from March and 2% from last year. It appears adjustments are being made at least with the number of employees.

National

Consumer Confidence

After two months of increasing consumer confidence, the June Conference Board Consumer Confidence Index declined. Both the Present Situation and Expectations Indexes fell to the lowest level since September 2017. The Present Situation Index decline was based on less favorable assessments of business and labor market conditions. The Expectations Index fell based on short-term outlooks for income, business and labor market conditions. The report noted that trade and tariff issues early in the month appear to have shaken consumers confidence.

Housing

Existing-home sales had a slight comeback in May, increasing for the first time in two months. Total existing-home sales increased 2.5% from April but were 1.1% below May 2018. Single-family sales in May were up 2.6% over April but were down 0.8% from May 2018. Existing-home sales in the Northeast were about equal to a year ago and up 1.3% in the South. Sales from a year ago were down 3.9% in the Midwest and 3.4% in the West.

Lawrence Yun, NAR’s chief economist, said that the increase shows that consumers were taking advantage of favorable conditions, primarily from falling mortgage rates.

New single-family houses in May were 7.8% below the April rate and were 3.7% below May 2018. New house sales were up in the Midwest and South but were off significantly in the Northeast and West compared to a year ago.

Housing starts in May were down 0.9% from April and 4.7% below May 2018. Single-family starts were down 12.5% from a year ago with all regions down except for the South which was up slightly.

Other

Advance estimates for U.S. retail and food services sales for May 2019 reported a 0.5% increase over April and 3.2% above May 2018. Sales at furniture and home furnishings stores were down 0.5% from May 2018. Year to date, sales at these stores were down 0.3%.

The Consumer Price Index for all Urban Consumers increased 0.1% in May after a 0.3% increase in April. Over the last 12 months, the all items index increased 1.8%. The index less food and energy increased 0.1% for the fourth straight month. The food index increased 0.3% after an April decline. The energy index fell 0.6% in May with the gas index down 0.5%.

Nonfarm employment results for May were disappointing, only up 75,000, while the unemployment rate stayed at 3.6%. Employment was noted as continuing up in professional and business services and in health care.

Thoughts

The April results unfortunately continued the string of declining orders. The weak results were pretty much in line with what we heard both during and after market. The not so good news is that we are not hearing much excitement even into June.

We continue to hear mixed results in conversations and our surveys seem to prove what we hear. Not everyone is down but clearly the majority are. Even so, some that are down are not down that much so that is why we continue to call the current business conditions “choppy” or even worse for some.

Overall retail is not that great either though according to the government reports. Furniture and home furnishings stores are lagging behind. Housing results, while up and down month to month, existing and new house sales were both below 2018 levels so if our historical thinking of furniture sales follow housing, one would think we might see some weaker results in furniture sales.

Consumer confidence remains high. We continue to hear that trade and tariff talks bother consumers, even though we know all furniture is not impacted – but consumers apparently do not understand that. Plus, normal political rhetoric on both sides does not give folks a lot of comfort. What did we do when we did not have news 24/7 and so many ways to get it?

Summer is here so let’s hang on till the normal last half pick up, even though it likely won’t start before September with vacations, etc. We hope you all have a great summer, both in your business and personally.