EXECUTIVE SUMMARY

New orders were down (3)% in May 2024 compared to May 2023 reversing recent trends and perhaps a normalization of the large increase we saw in April 2024. However, year to date through May 2024, new orders are up 6% compared to the same period of 2023. New orders for May 2024 were once again flat compared to the prior month of April 2024, marking the third consecutive month of no overall change.

Shipments are again materially in line compared to last year, with May 2024 down (4)% from May 2023 (had been up 2% in April), and flat compared to April 2024. Year to date through May 2024, shipments are down (8)% compared to the same period of 2023.

May 2024 backlogs were down (6)% compared to May 2023, and down (1)% from April 2024.

Receivable levels were down (6)% from May 2023, which is materially in line with shipments for the same period and year to date 2024.

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® rose in July to 100.3 (1985=100), from a downwardly revised 97.8 in June.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—declined to 133.6 from 135.3 last month.

Meanwhile, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—improved in July to 78.2. That’s up from 72.8 in June but still below 80 (the threshold which usually signals a recession ahead).

“Compared to last month, consumers were somewhat less pessimistic about the future. Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead. Meanwhile, consumers were a bit less positive about current labor and business conditions. Potentially, smaller monthly job additions are weighing on consumers’ assessment of current job availability: while still quite strong, consumers’ assessment of the current labor market situation declined to its lowest level since March 2021.”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 fell to a 12-year low. While buying plans for cars were little changed, buying plans for most big-ticket appliances increased slightly. Additionally, more consumers reported plans to buy a smartphone or laptop/PC in the next six months

Housing

Existing-home sales fell in June as the median sales price climbed to the highest price ever recorded for the second consecutive month, according to the National Association of REALTORS®. All four major U.S. regions posted sales declines. Year-over-year, sales waned in the Northeast, Midwest and South but were unchanged in the West.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – receded 5.4% from May to a seasonally adjusted annual rate of 3.89 million in June. Year-over-year, sales also dropped 5.4% (down from 4.11 million in June 2023).

Single-family home sales retracted to a seasonally adjusted annual rate of 3.52 million in June, down 5.1% from 3.71 million in May and 4.3% from the prior year. The median existing single-family home price was $432,700 in June, up 4.1% from June 2023.

Existing condominium and co-op sales tumbled 7.5% in June to a seasonally adjusted annual rate of 370,000 units, down 14% from one year ago (430,000 units). The median existing condo price was $371,700 in June, up 2.6% from the previous year ($362,200).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.77% as of July 18. That’s down from 6.89% one week ago and 6.78% one year ago.

Sales of new single-family houses in June 2024 were at a seasonally adjusted annual rate of 617,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6% below the revised May rate of 621,000 and is 7.4% below the June 2023 estimate of 666,000.

Compared to June 2023 on a seasonally-adjusted basis, sales were down (7.4)% overall with sales up 32.8% in the Midwest and 2.8% in the West, while down (12.2)% in the South and (63.6)% in the Northeast.

Other

Real gross domestic product (GDP) increased at an annual rate of 2.8% in the second quarter of 2024, according to the “advance” estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP increased 1.4%.

The increase in real GDP primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Compared to the first quarter, the acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending. These movements were partly offset by a downturn in residential fixed investment.

Sales at furniture and home furnishings stores were up 0.6% in June 2024 from May 2024 on a seasonally-adjusted basis, but down (4.0)% from June 2023.

Thoughts

Well, there was certainly no shortage of interesting storylines since last month, with a high-profile retail bankruptcy, ocean freight concerns, interest rate cuts on the horizon, and changes to the political landscape here in the States, among other things.

The Conn’s/Badcock bankruptcy is another reminder of the shifting landscape within the industry and that business continues to be tough at retail, while also highlighting the need for companies to pursue multiple sales channels to mitigate risk, whether that be with designers, e-commerce, etc. However, we also see others expanding operations and opening new stores, so retail is certainly not dead.

Meanwhile, ocean container rates, while higher than we’d prefer, appear to have peaked based upon industry reports and are expected to decline in the second half of the year as demand and capacity become more balanced. The latest World Container Index (“WCI”) indicates that spot rates decreased 1% overall last week, including a 3% reduction in the Shanghai to Los Angeles route.

On another positive note, in their July 2024 meeting, the Fed opened the door to a potential rate cut at their next meeting on September 17-18th if inflation continues to ease, followed by additional possible cuts in 2025.

Overall, the national economic indicators we track are again “mixed” in June/July 2024 with little meaningful change compared to recent months, but the general consensus appears to be that consumers are cautiously optimistic, but anxious about what the future holds.

Looking at our monthly stats for the last few months, it’s probably worth noting that new orders, shipments, and backlog have pretty much stayed within a 0-5% range for our participants, which if nothing else, provides companies with some stability with which to manage operations until these other factors work themselves out.

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