HIGH POINT – New orders for furniture continued to increase in February, up 6% compared with the same month last year, according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard.
While another positive month for orders, it was the last one before COVID-19’s full impact on North American business struck. Around 71% of survey participants reported order increases for February, following a 2% increase in January.
February shipments rose 4% over February 2019 and were up for 61% of participating vendors. Shipments had declined 3% in January, making year-to-date shipments basically flat compared with 2019’s first three months.
Backlogs were up 2% over January 2020, bringing backlogs up 10% over February 2019. January 2020 backlogs were up 7% over January 2019.
Receivable levels declined 1% from February 2019 and down 5% from January.
“The 1% decline considering year-to-date flat shipments was a good sign, especially to start at a good level before the virus pandemic set in,” Smith Leonard Partner Ken Smith said in the report. “The 5% decline from January was normal as shipments in February are usually down from January.”
Inventories increased 3% from February 2019 levels, down from a 4% increase reported in January. “Inventories in February were down 4% from January 2020, so it appears inventories were in pretty good shape going into the pandemic,” Smith noted.
Factory and warehouse employment declined 2% from January, putting the number of employees about equal with February 2019. Factory and warehouse payrolls were flat in February compared with the same month last year, with payrolls down 5% from January since February had fewer working days. Payrolls were up 2% for January through February.
In summary, Smith noted several people were asked to comment on what to say in this issue of Furniture Insights, and the answers reflected COVID-19’s impact on moods.
“So far, the best comments that could be printed are ‘Good luck,’” Smith said. “Seriously, what do you say? It is really hard to make an overall statement. Some of you, in places when you could, have been able to work at least on a limited schedule based on backlogs or designer orders or limited retail by appointment. Other have developed some health care products whether furniture or masks. And many of you have applied for the Payroll Protection Program loans and have experienced all sorts of fun with that ever-changing exercise and its various interpretations.”
He added that a second wave of funding will lead to some relief, along with other loan program, deferred payroll tax payments or other options. Smith also pointed out that some states are opening back up for business, and “we hope not too soon.”
“We do think it is going to be a while before we hit ‘normal’ again, whatever that may look like,” he said. “While some think the economy will come back strong and quickly, we are not sure how ‘quickly’ that will be. As accountants are usually on the conservative side, we would suggest you plan on a slower recovery. Preparing for less business and getting a lot more is much better than assuming business back to pre-March levels and it not happening.”
He concluded that it was a wise choice to cancel spring High Point Market. “We hope that by the time our May letter comes out and likely reveals weak March results, we will have a better idea of a go-forward plan,” Smith said. “In the meantime, stay safe and careful.”
Click here for the full Furniture Insights report.