Executive Summary

The results of our survey for September 2022 continued to reflect the slowdown of business overall. Approximately 91% of our participants reported lower new orders for September as well as year-to-date compared to last year. New orders were down 26% for the month versus September 2021 (September 2021 orders were down 20% from September 2020). For the nine months ending September 2022, new orders were down 29% from 2021 (New orders were down 21% in the 2021 to 2020 comparison).

The good news was that shipments continued to hold up due to the large backlogs that had built up. Shipments were up 5% over September 2021 with 71% reporting positive increases. Year-to-date shipments were up 6% compared to 2021 when they were up 30% over the first nine months of 2020. So, the smaller percentage increase in 2022 is really a nice increase.

Backlogs were down 40% from September 2021 and fell 6% from August. Yet the total backlogs remain, for many, at fairly high levels. This should help weather the storm of recessions or whatever it’s called for some time.
The other stats were still in good shape especially receivables, though inventories remain too high.

National

Consumer Confidence

The Conference Board’s Consumer Confidence Index decreased again in November with both the indexes of the Present Situation and Expectations falling. “Consumer confidence declined again in November, most likely prompted by the recent rise in gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.

Housing

Existing-home sales fell for the ninth straight month in October, according to the National Association of REALTORS®. All four major U.S. regions registered month-over-month and year-over-year declines.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 5.9% from September. Year-over-year, sales dropped by 28.4% (down from 6.19 million in October 2021).

Single-family home sales declined 6.4% in September and 28.2% from one year ago. The median existing single-family home price was $384,900 in October, up 6.2% from October 2021.

Sales of new single‐family houses in October 2022 were 7.5% above September but were 5.8% below the October 2021 estimate.
Compared to October 2021, sales were up 59.4% in the Northeast but down 26.5% in the Midwest, 0.3% in the South and 22.8% in the West for an overall 5.8% decline.

The seasonally adjusted estimate of new houses for sale at the end of October was 470,000, a supply of 8.9 months at the current sales rate.

Other

Advance estimates of U.S. retail and food services sales for October 2022 were up 1.3% from the previous month, and 8.3% above October 2021. Total sales for the August 2022 through October 2022 period were up 8.9% from the same period a year ago.
Retail trade sales were up 1.2% from September 2022, and up 7.5% above last year. Gasoline stations were up 17.8% from October 2021, while food services and drinking places were up 14.1% from last year.

Sales at furniture and home furnishings stores were up 0.4% from October 2021 and up 1.6% year to date. But remember that sales at these stores in October 2021 were up 11.9% over sales in October 2020 and up 29.1% over year-to-date 2020 sales. The year-to-date sales increase of 2021 over 2020 was the 5th highest of all categories.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in October on a seasonally adjusted basis, the same increase as in September. Over the last 12 months, the all-items index increased 7.7% before seasonal adjustment.

The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. The food index increased 0.6% over the month with the food at home index rising 0.4%.

Total nonfarm payroll employment increased by 261,000 in October, and the unemployment rate rose to 3.7%. Notable job gains occurred in health care, professional and technical services, and manufacturing.

The Conference Board Leading Indicators report noted that real GDP growth will be 1.8% year over year in 2022, and a recession is likely to start around year-end and last through mid-2023.

Thoughts

We are hearing various thoughts on the current state of business. Some are still seeing declines, however one might measure them, while others seemed to have maybe “bottomed out.” That is, they felt the slowdown in orders that was somewhat expected then beginning May-June-July began to see further declines. Since then, some feel that there is maybe a new level of business that seems to be somewhat flat or increasing slightly.

Clearly, inflation is bothering the consumer at almost all levels, especially at the lower end and the uncertainty of the stock market is affecting the middle and upper middle.

The midterm elections did not move the needle in Washington as much as many hoped or feared, depending on which side you are on. We won’t get into politics, but it truly is amazing how some of the voters elect certain candidates.

We did hear that Black Friday sales seemed to be good for most all of retail and some reports that included furniture.
At market, one client suggested that he reads our newsletter pretty much every month but lately he basically has no clue what we are saying lately. I explained that that is sometimes the way I feel when writing it. So, for that we apologize. It’s just hard to make sense of comparisons to periods of shutdowns, rising prices at unheard of levels, crazy increases in business that were not sustainable and now likely reduction of prices as certain costs have come down. We just hope that the margins gained during these times are not given back in the interest of chasing volume. Another subject for another day

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