EXECUTIVE SUMMARY

New orders were up 22% in April 2024 compared to April 2023 (which was down 19% from April 2022), continuing our streak of 10 out of the last 11 months with overall order growth over the prior year. While the elevated percentage would appear to be a bit of an outlier compared to recent months, year to date through April 2024, new orders are up 8% compared to 2023. However, new orders were flat compared to the prior month of March 2024.

Shipments appear to have begun normalizing compared to last year, with April 2024 up 2% from April 2023, but down (1)% from March 2024. Year to date through April 2024, shipments are down (9)% compared to 2023.

April 2024 backlogs were down (12)% compared to April 2023, but up 2% from March 2024.

Receivable levels were consistent with March 2024, but down (3)% from April 2023, which is materially in line with shipments for the same periods.

Inventories and employee levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations.

National

Consumer Confidence

The Conference Board Consumer Confidence Index® dipped in June to 100.4 (1985=100), down from 101.3 in May.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 141.5 (1985=100) from 140.8 last month.

However, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 73.0 (1985=100) in June, down from 74.9 in May. The Expectations Index has been below 80 (the threshold which usually signals a recession ahead) for five consecutive months.

“Confidence pulled back in June but remained within the same narrow range that’s held throughout the past two years, as strength in current labor market views continued to outweigh concerns about the future. However, if material weaknesses in the labor market appear, Confidence could weaken as the year progresses,” said Dana M. Peterson, Chief Economist at The Conference Board.

Peterson added: “Compared to May, consumers were less concerned about a forthcoming recession. However, consumers’ assessment of their Family’s Financial Situation—both currently and over the next six months—was less positive.”

On a six-month moving average basis, purchasing plans for homes were largely unchanged and remained historically low in June. Buying plans for cars also stalled. Meanwhile, buying plans for most big-ticket appliances and smartphones increased slightly, though fewer consumers planned to buy a laptop or a PC.

Housing

Existing-home sales slightly declined in May as the median sales price climbed to a record high, according to the National Association of REALTORS®. In the four major U.S. regions, sales slid month-over-month in the South but were unchanged in the Northeast, Midwest and West. Year-over-year, sales rose in the Midwest but receded in the Northeast, South and West.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – retreated 0.7% from April to a seasonally adjusted annual rate of 4.11 million in May. Year-over-year, sales waned 2.8% (down from 4.23 million in May 2023).

Single-family home sales declined to a seasonally adjusted annual rate of 3.71 million in May, down 0.8% from 3.74 million in April and 2.1% from the prior year. The median existing single-family home price was $424,500 in May, up 5.7% from May 2023.

At a seasonally adjusted annual rate of 400,000 units in May, existing condominium and co-op sales were unchanged from last month and down 9.1% from one year ago (440,000 units). The median existing condo price was $371,300 in May, up 5.1% from the previous year ($353,300).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.87% as of June 20. That’s down from 6.95% the prior week but up from 6.67% one year ago.

Sales of new single‐family houses in May 2024 were at a seasonally adjusted annual rate of 619,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.3% below the revised April rate of 698,000 and is 16.5% below the May 2023 estimate of 741,000.

Compared to May 2023 on a seasonally-adjusted basis, sales were down (16.5)% overall with sales up 13.3% in the Midwest, down (17.7)% in the South, (20.9)% in the West, and (43.8)% in the Northeast.

Other

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first quarter of 2024, according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased 3.4%.

The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports increased.

Compared to the fourth quarter, the deceleration in real GDP primarily reflected decelerations in consumer spending, exports, and state and local government spending, and a downturn in federal government spending. These movements were partly offset by an acceleration in residential fixed investment. Imports accelerated.

Sales at furniture and home furnishings stores were down 0.1% in May 2024 from April 2024 on a seasonally-adjusted basis, and down 6.8% from May 2023.

Thoughts

Overall, there were minimal changes in the economic indicators we track during April/May 2024 compared to recent months. However, our monthly stats and national data shows the furniture industry continuing to hold its own in the face of headwinds from consumer confidence, housing, interest rates, and inflation.

Meanwhile, ocean container rates are again on the rise with TD Cowen reporting a 94% increase in spot rates between March 28 and June 27, though this is expected to ease in the second half of the year. This has led some within the industry to reestablish surcharges on internationally sourced goods.

On a more positive note, in their June 2024 meeting, the Fed indicated the possibility for one 0.25% cut by the end of the year, with the potential for up to four additional 0.25% cuts in 2025 if inflation continues to ease.

Hopefully, the increased new orders we’ve seen in our monthly stats for the first four months of 2024 will drive strong shipments through the remainder of the summer into the fall, when help could be on the way in the form of initial interest rate cuts, increased housing activity, lower container rates, and improvements in consumer confidence as life returns to “normal” post-election cycle.

Hope our friends here in the States enjoy their July 4th holidays.

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