HIGH POINT, N.C. - Although new residential furniture orders rose 5% in January 2023 compared to December figures, the year-over-year comparison saw a double-digit drop, down 25% from January 2022, according to the latest issue of Furniture Insights produced by Smith Leonard. Orders were down for 77% of the survey participants.

"This decline was pretty much in line with the conversations we have had lately with industry people," noted Ken Smith, managing partner at Smith Leonard. "There has been some flattening and even slight increases reported late this quarter so we will see when those results are in."

Shipments in January were 4% below December figures and down 3% from January 2022. "The results for shipments were not consistent as just over half the participants reported a decrease in shipments versus the prior year. Shipments comparisons have not fluctuated with orders due to so many issues with goods coming out of Asia as well as difficulties for domestic manufacturers in getting materials as well as shortages of labor in the U.S.," Smith said in the March Furniture Insights. 

Backlogs fell 7% from December and were down 40% from January 2022. "The decline in backlogs continued to try to get backlogs caught up with the large increase in orders in late 2020 and 2021, that with the issues above, caused backlogs to grow to unprecedented levels. Backlogs remain higher than 2019 levels, but much of the price increases of 20 to 30% we think are reflected in the dollar amount of backlogs reported."

Receivable levels fell 1% from December and were 8% below January 2022, Smith added. "Most of what we are seeing says that receivable levels remain in pretty good shape but will need to be watched as business at retail has slowed which will slow retailer abilities to stay as current as they were when good business required staying current in order to get product shipped."

Inventories fell 5% from December but were up 20% from January 2022. "That result is much better than the 40 to 50% increases that have been reported for several months as inventories were increased to cover demand, as well as shortages of product and materials," he said.

"We have had several conversations with executives over the last month trying to stay somewhat current with what is going on daily with business," Smith commented. "Obviously, the actual results and resulting opinions changes from day to day. As we have noted before, the old days of worrying about orders on a monthly or even weekly basis have changed to results almost on an hourly basis. But the overall answer we are getting is that business is 'slow' no matter the comparisons. With backlogs coming down and deliveries getting back to more normal times, we think this may help business at retail when customers will not have to consider how long the wait may be before getting product delivered."

On an adjusted basis, February sales at furniture and home furnishings stores were slightly ahead of February 2022 figures, but were up 3.5% over last year, year to date.

"Looking outside the industry, there are so many things being reported, it makes it hard to determine how things really are. Recession now, or not, or one coming or how harsh, is all up for grabs. So much negative news makes it hard to feel really great about where we are heading."

Smith continued, "We understand that Premarket was slightly above expectations for most and accomplished what most expect, like tweaking products, or as some told us, at least it makes us much more ready for market when it really happens. We hope springtime will be here in High Point when you come and we can return to a market that might be a little closer to normal than the last few."