HIGH POINT, N.C. - New residential furniture orders in February were down 17% from February 2022, though up slightly from January 2023. according to the latest issue of Furniture Insights produced by Smith Leonard. Orders were down for more than 80% of the survey participants.

Year to date, orders were down 20% for the two months compared to last year, the accounting and consulting firm noted.

"We looked back at February 2020 results, the month before the start of the pandemic, and found that orders were down about 10% from that month," said Ken Smith, managing partner at Smith Leonard. "Obviously, there have been several price increases since that time, so the decline in units is likely more, depending on the mix of products."

Shipments were down 6% in February compared to 2022, and down 4% for the year to date. "As shipments exceeded orders in dollars, backlogs fell again, down 6% from January," Smith said in the April Furniture Insights. Backlogs were down 62% compared to February 2022, figures. Shipments were down for 56% of the participants.

"Receivable levels seem in line and in talks, seem to be in good shape," Smith said. "There are some concerns over the slow business at retail which may cause cash flow issues for some. Inventory levels fell again in February compared to January (-9%) and were only 5% ahead of February last year, much more in line with current business. At least some of the increase over last year is in price increases, though that will change as some freight costs have now dropped."

Smith added, "We finished off our visits at the High Point Market with what seemed like a pretty good market, at least from an attendance standpoint. The significant retailers and buyers were here, and more and more designers continue to come. As always, the 'mood' of market was good as it is always great to see old friends, make new ones, and see great product shown the way furniture is supposed to be shown.

"That said, the talk of business back at home for most was best described as 'slow.' For retailers, the comments were that traffic is down but those that do shop, seem to be buying."

On an adjusted basis, March sales at furniture and home furnishings stores were down 2.4% from March 2022. Year to date, sales at these stores were up 1.5% for the three months.

"The overall economy is definitely slower," Smith noted. "The GDP for the quarter reflected that and the economic news seems to say recession is near, though many would say it is already here, especially at the lower end."

He continued, "The troubled banks are not going to help matters and the continued increase in rates is not helping. The higher mortgage rates, along with higher inflation in general, are definitely affecting most people’s pocketbooks, especially for purchases that can be delayed. The issues also are slowing the housing market, which usually helps to drive furniture purchases.

"The one issue we heard at market that was also troubling was the continued push to lower retail prices. We have pushed for prices to stay at higher levels as during the last couple of years. It has been proven that product could be sold at the higher prices. We understand that prices can and should be dropped for the change in container costs, but most other prices for material and labor have not gone down much, if any. It would be a shame for the industry to give back much-needed margins that were seen during the pandemic."