The results of our monthly survey of residential furniture manufacturers and distributors once again requires explanation. At first glance, the September 2021 results would be alarming, but one has to look beyond the first glance. New orders in September 2021 were down 20% from September 2020. But the look beyond showed that September 2020 orders were up 43%. So we looked to compare 2021 to 2019 and found that September 2021 orders were up 15% over 2019. Therefore, after looking through the numbers, September continued the streak of very nice results. Year to date, new orders were up 21% over 2020 and up 32% over the first nine months of 2019.
Shipments were only up 4% over last September, but year to date shipments were 30% higher than the same period a year ago. Shipments were up for 91% of the participants. Most of the participant’s shipments have been delayed by lack of workers to manufacture, supply chain issues for domestic manufacturers, as well as supply chain for imports, whether lack of goods or freight issues.
With that, backlogs continued to grow, up 56% over September 2020, which were up 123% over September 2019. These high backlogs are worrisome for most, but consumers seem to hear the same story over and over so they appear, while frustrated, to be getting used to delays.
Receivable and inventory levels seem ok, even with inventories a bit high. Today, the idea seems to be more worry about having inventory to sell, versus control of inventory.
The number of factory and warehouse employees continues to be an issue or rather the lack of those employees. This seems to be true whether warehouse or manufacturing.
Due to the holidays, the Conference Board’s Consumer Confidence Index was not available at press time. But we would expect no major improvement as the October University of Michigan preliminary report showed continuing declines in confidence, with inflation keeping confidence down along with news out of Washington.
Existing-home sales continued to be strong. As with furniture sales, it is hard to just compare to last year as last fall housing was booming. According to the report from NAR, existing-home sales remain resilient, despite low inventory and increasing affordability challenges. Inflationary pressures, such as fast-rising rents and increasing consumer prices, have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.
While sales were down from last year in all four regions, once again the comparisons to last year were distorted by 15% plus growth reported in all regions last year.
October housing starts were down slightly from September but up 0.4% over last October. Single family starts though were down 10.6%.
The advance report on retail and food services continued very positive with sales up 16.3% over October 2020. While some reports noted that sales at furniture and home furnishings stores were among the lowest increases shown from September to October, they failed to note that sales increased 11.9% over last October and were up 29.1% year to date, the fifth-highest of all 14 categories. One of the ones that was higher was gasoline stations and we know that was likely not all volume increases.
The Consumer Price Index was among the notable “bad news” reports, again with energy being a major factor but most all categories showed increases. This is one of the areas affecting consumer confidence for sure.
The employment situation was a brighter spot in that nonfarm payroll employment increased 531,000 in October bringing the unemployment rate down to 4.6%. Also, the number of unemployed continued to trend down.
The Conference Board Leading Economic Index® (LEI) for the U.S. increased by 0.9% in October to 118.3 following a 0.1% increase in September and a 0.7% increase in August.
The report indicated the sharp rise in the index in October suggested that the current economic expansion will continue into 2022 and may even gain some momentum in the final months of this year.
Real gross domestic product (GDP) increased at an annual rate of 2.1% in the third quarter of 2021, according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 6.7%. The changes in GDP have been affected by the impact of COVID-19 (including Government support) which according to the report cannot be quantified.
Once again, the results of our survey, as well as most of our conversations, seem to need explanations. As we talk with folks, it seems that business seems to slow a bit but then when we look at the numbers, it seems that business continues to be pretty good overall. As with our survey, not everyone is up the same or even up every given month, but overall the results continue to be good for most.
Supply chain challenges continue through this issue of FI. There is some feeling that container prices may be easing somewhat, but once Asia opens back up, who knows if that demand creates the continued high prices. Some of the shortages of materials seem to be easing off. Labor shortages continue, but that seems to be everywhere. For example, try to find a place to eat lunch on Mondays. So many are closed so they can give their employees at least one day off as they just do not have enough employees.
With all the issues we seem to be facing including all the political stuff, we still have so much to be thankful for. All I have talked to say that they wouldn’t trade these current issues for 2008 issues. In addition, with all the political stuff and differences of opinion, what other country would you rather live in. So let’s all take a moment this weekend (if you don’t get this in time for Thanksgiving) to be thankful for all we have.
We wish you a wonderful and healthy Thanksgiving season.