June 2024 Furniture Insights Report From Smith Leonard
Furniture World News Desk on
7/4/2024
MONTHLY RESULTS
New Orders
According to our latest survey of residential furniture manufacturers and distributors, 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,
approximately 75% of the participants reported increased orders in April 2024
compared to a year ago. However, new orders were once again flat
compared to the prior month of March 2024. Year to date through April 2024,
new orders are up 8% compared to 2023.
Shipments and Backlogs
Shipments appear to have begun normalizing compared to last year, with
April 2024 up 2% from April 2023, but down (1)% from March 2024.
Shipments in April 2024 were up for approximately half of the participants
compared to April 2023.
Year to date through April 2024, shipments are down (9)% compared to
2023. Presumably that trend will begin to turnaround in the coming months
with the increased new order volumes.
April 2024 backlogs were down (12)% compared to April 2023, but up 2%
from March 2024.
Receivables and Inventories
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 were also consistent with March 2024, but down (20)% from April
2023, which is in line with prior periods and current operational levels.
Factory and Warehouse Employees and Payroll
The number of factory and warehouse employees was down (6)% from April a year ago, and down slightly from March 2024
with a
reduction of (2)%. Year to date through April 2024, payroll expense is down (5)% from 2023, which is consistent with
the
employee
headcount.
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.
“Consumers expressed mixed feelings this month: their view of the
present situation improved slightly overall, driven by an uptick in
sentiment about the current labor market, but their assessment of
current business conditions cooled. Meanwhile, for the second month
in a row, consumers were a bit less pessimistic about future labor
market conditions. However, their expectations for both future income
and business conditions weakened, weighing down the overall
Expectations Index."
"The decline in confidence between May and June was centered on
consumers aged 35-54. By contrast, those under 35 and those 55 and
older saw confidence improve this month. No clear pattern emerged
in terms of income groups. On a six-month moving average basis,
confidence continued to be highest among the youngest (under 35)
and wealthiest (making over $100K) consumers.”
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.” (These measures are not included in
calculating the Consumer Confidence Index®).
Average 12-month inflation expectations ticked down slightly from
5.4% to 5.3%. June’s write-in responses revealed that elevated prices,
especially for food and groceries, continued to impact consumers’
views of the economy, followed by the labor market and US political
situation. Notably, the share of respondents believing the 2024
election would impact the economy was low in comparison to write-ins in June of 2016 and slightly higher than in 2020.
Consumers were positive about the stock market, with 48.4% expecting stock prices to increase over the year ahead,
compared to
23.5% expecting a decrease and 28.1% expecting no change. Meanwhile, the share of consumers expecting higher interest
rates
over the next twelve months dropped to 52.6%, its lowest level since February.
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.
The share of consumers planning a vacation over the next six months continued to increase and remains above last
June’s
level.
More consumers planned to vacation in the US than abroad. As in recent years, more people plan to travel by car than
by
plane.
Overall, the share of consumers planning to go on vacation is still about 10 percentage points lower than
pre-pandemic.
Present Situation
Consumers’ assessment of current business conditions was, on balance, slightly less positive in June.
-
19.6% of consumers said business conditions were “good,” down from 20.8% in May.
- But 17.7% said business conditions were “bad,” also down from 18.4% last month.
Consumers’ appraisal of the labor market improved in June.
-
38.1% of consumers said jobs were “plentiful,” up from 37.0% in May.
-
14.1% of consumers said jobs were “hard to get,” down from 14.3%.
Expectations Six Months Hence
Consumers were less optimistic about the short-term business conditions outlook in June.
-
12.5% of consumers expected business conditions to improve, down from 13.7% in May.
- 16.7% expected business conditions to worsen, down from 16.9%.
Consumers’ assessment of the short-term labor market outlook was a tad less negative in June.
-
12.6% of consumers expected more jobs to be available, down from 13.1% in May.
- 17.3% anticipated fewer jobs, down from 18.8% last month.
Consumers’ assessment of their short-term income prospects deteriorated in June.
-
15.2% of consumers expected their incomes to increase, down from 17.7% in May.
- 11.7% expected their incomes to decrease, up from 11.5%.
Assessment of Family Finances and Recession Risk
-
Consumers’ assessment of their Family’s Current Financial Situation weakened in June.
-
Consumers’ assessment of their Family’s Financial Situation going forward was virtually unchanged.
-
Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months pulled back in June, after rising in both
May
and April.
Leading Economic Indicators
he Conference Board Leading Economic
Index® (LEI) for the U.S. decreased by 0.5% in
May 2024 to 101.2 (2016=100), following a 0.6%
decline in April. Over the six-month period
between November 2023 and May 2024, the LEI
fell by 2.0%—a smaller decrease than its 3.4%
contraction over the previous six months.
“The U.S. LEI fell again in May, driven primarily by
a decline in new orders, weak consumer
sentiment about future business conditions, and
lower building permits,” said Justyna Zabinska-La
Monica, Senior Manager, Business Cycle
Indicators, at The Conference Board. “While the
Index’s six-month growth rate remained firmly
negative, the LEI doesn’t currently signal a
recession. We project real GDP growth will slow
further to under 1% (annualized) over Q2 and Q3
2024, as elevated inflation and high interest rates
continue to weigh on consumer spending.”
The Conference Board Coincident Economic
Index® (CEI) for the U.S. rose by 0.4% in May
2024 to 112.4 (2016=100), after increasing by
0.1% in April. The CEI grew 0.6% over the six-
month period ending May 2024, down from its
1.0% increase over the previous six months. The
CEI’s component indicators—payroll employment,
personal income less transfer payments,
manufacturing and trade sales, and industrial
production—are included among the data used to
determine recessions in the US. All four
components of the index improved last month,
with industrial production making the largest
positive contribution to the Index.
The Conference Board Lagging Economic
Index® (LAG) for the U.S. inched down by 0.1%
in May 2024 to 119.4 (2016=100), after increasing
by 0.3% in April. As a result, the LAG’s six-month
growth rate softened to 0.7% between November
2023 and May 2024, down from 0.8% over the
previous six months.
Gross Domestic Product
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 GDP estimate is based on more complete source data than were available for the "second" estimate issued last
month.
In the
second estimate, the increase in real GDP was 1.3%. The upward revision primarily reflected a downward revision to
imports, which
are a subtraction in the calculation of GDP, and upward revisions to nonresidential fixed investment and government
spending.
These revisions were partly offset by a downward revision to consumer spending.
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.
The price index for gross domestic purchases increased 3.1% in the first quarter, an upward revision of 0.1 percentage
point from
the previous estimate. The personal consumption expenditures (PCE) price index increased 3.4%, an upward revision of
0.1
percentage point. Excluding food and energy prices, the PCE price index increased 3.7%, an upward revision of 0.1
percentage
point.
HOUSING
Existing-Home Sales
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.
Total housing inventory registered at the end of May was 1.28 million units, up 6.7% from April and 18.5% from one
year
ago (1.08
million). Unsold inventory sits at a 3.7-month supply at the current sales pace, up from 3.5 months in April and 3.1
months in May
2023.
The median existing-home price for all housing types in May was $419,300, the highest price ever recorded and an
increase of
5.8% from one year ago ($396,500). All four U.S. regions registered price gains.
"Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be
first-time
buyers," Yun added. "The mortgage payment for a typical home today is more than double that of homes purchased before
2020.
Still, first-time buyers in the market understand the long-term benefits of owning."
According to the monthly REALTORS® Confidence Index, properties typically remained on the market for 24 days in May,
down
from 26 days in April but up from 18 days in May 2023.
First-time buyers were responsible for 31% of sales in May, down from 33% in April but up from 28% in May 2023. NAR's
202
Profile
of Home Buyers and Sellers
– released in November 2023 – found that the annual share of first-time buyers
was 32%.
Regional
Existing-home sales in the Northeast in May were identical to April at an annual rate of 480,000, a decline of 4% from
May 2023.
The median price in the Northeast was $479,200, up 9.2% from the prior year.
In the Midwest, existing-home sales were unchanged from one month ago at an annual rate of 1 million in May, up 1%
from
one
year ago. The median price in the Midwest was $317,100, up 6.4% from May 2023.
Existing-home sales in the South fell 1.6% from April to an annual rate of 1.87 million in May, down 5.1% from the
previous year.
The median price in the South was $374,300, up 3.6% from last year.
In the West, existing-home sales in May were equivalent to April at an annual rate of 760,000, a drop of 1.3% from one
year before.
The median price in the West was $632,900, up 5.5% from May 2023.
New Residential Sales
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.
The median sales price of new houses sold in May 2024 was
$417,400 ($433,500 in April 2024). The average sales price was
$520,000 ($505,700 in April 2024).
The seasonally‐adjusted estimate of new houses for sale at the end
of May was 481,000 (480,000 in April 2024). This represents a
supply of 9.3 months at the current sales rate (9.1 months in April
2024).
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.
Housing Starts
Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,277,000. This is 5.5% below the
revised April
estimate of 1,352,000 and is 19.3% below the May 2023 rate of 1,583,000.
Single‐family housing starts in May were at a rate of 982,000; this is 5.2% below the revised April figure of
1,036,000.
The May rate for units in buildings with five units or more was 278,000 (322,000 in April).
Single-family starts compared to May 2023, on a seasonally-adjusted basis, were down (1.7)% in total and also down
(3.5)% in the
South, (19.4)% in the Midwest, (3.3)% in the Northeast, while being up 16.9% in the West.
Housing Completions
Privately‐owned housing completions in May were at a seasonally adjusted annual rate of 1,514,000. This is 8.4% below
the revised
April estimate of 1,652,000, but is 1.0% above the May 2023 rate of 1,499,000.
Single‐family housing completions in May were at a rate of 1,027,000; this is 8.5% below the revised April rate of
1,122,000.
The May rate for units in buildings with five units or more was 479,000 (516,000 in April).
Single-family completions compared to May 2023, on a seasonally-adjusted basis, were up 2.0% in total and also up 6.8%
in the
South, while being down (2.2)% in the West, (7.4)% in the Midwest and (6.0)% in the Northeast.
OTHER NATIONAL
Retail Sales
Advance estimates of U.S. retail and food services sales for May 2024, adjusted for seasonal variation and holiday and
trading-day
differences, but not for price changes, were $703.1 billion, up 0.1% from the previous month, and up 2.3% above May
2023. Total
sales for the March 2024 through May 2024 period were up 2.9% from the same period a year ago. The March 2024 to April
2024
percent change was revised from virtually unchanged to down 0.2%.
Retail trade sales were up 0.2% from April 2024, and up 2.0% above last year. Nonstore retailers were up 6.8% from
last
year, while
food services and drinking places were up 3.8% from May 2023.
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.
Consumer Prices
The Consumer Price Index for All Urban Consumers was unchanged in May on a seasonally adjusted basis, after rising
0.3%
in
April, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all-items index increased 3.3%
before
seasonal
adjustment.
More than offsetting a decline in gasoline, the index for shelter rose in May, up 0.4% for the fourth consecutive
month.
The index
for food increased 0.1% in May. The food away from home index rose 0.4% over the month, while the food at home index
was
unchanged. The energy index fell 2.0% over the month, led by a 3.6% decrease in the gasoline index.
The index for all-items less food and energy rose 0.2% in May, after rising 0.3% the preceding month. Indexes which
increased in
May include shelter, medical care, used cars and trucks, and education. The indexes for airline fares, new vehicles,
communication,
recreation, and apparel were among those that decreased over the month.
The all-items index rose 3.3% for the 12 months ending May, a smaller increase than the 3.4% increase for the 12
months
ending
April. The all-items less food and energy index rose 3.4% over the last 12 months. The energy index increased 3.7% for
the 12
months ending May. The food index increased 2.1% over the last year.
Employment
Total nonfarm payroll employment increased by 272,000 in May, and the unemployment rate changed little at 4.0%, the
U.S.
Bureau
of Labor Statistics reported. Employment continued to trend up in several industries, led by health care; government;
leisure and
hospitality; and professional, scientific, and technical services.
Both the unemployment rate, at 4.0%, and the number of unemployed people, at 6.6 million, changed little in May. A
year
earlier,
the jobless rate was 3.7%, and the number of unemployed people was 6.1 million.
Durable Goods Orders and Factory Shipments
New orders for manufactured durable goods in May, up four consecutive months, increased $0.3 billion or 0.1% to $283.1
billion,
the U.S. Census Bureau announced. This followed a 0.2% April increase. Excluding transportation, new orders decreased
0.1%.
Excluding defense, new orders decreased 0.2%. Transportation equipment, up three of the last four months, drove the
increase,
$0.5 billion or 0.6% to $95.4 billion.
Shipments of manufactured durable goods in May, down following three consecutive monthly increases, decreased $1.0
billion or
0.3% to $284.7 billion. This followed a 1.2% April increase. Transportation equipment, also down following three
consecutive monthly
increases, led the decrease, $0.8 billion or 0.8% to $92.0 billion.
On a seasonally-adjusted basis, shipments for furniture and related products were down (0.4)% compared to the prior
month, while
new orders were down (1.2)%. On a non-adjusted basis, year to date shipments for furniture and related products were
up
0.3%
compared to the prior year, while new orders were up 0.2%.
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.
This Furniture Insights® newsletter report has been re-published with
the permission of Smith Leonard PLLC an independent member of the BDO
Seidman Alliance.
Firm Profile: Founded in 1930 by BDO Seidman, LLP, the High Point, North
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Practice Concentration – The majority of the client base is composed
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Many of its clients are either furniture manufacturers, distributors or
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