New Furniture Orders Riding a Hot Streak
September 2021New orders for residential furniture are continuing to roll, rising 7% in June compared to June 2020, according to accounting firm Smith Leonard. In its August 2021 Furniture Insights, Smith Leonard noted that June’s increase is especially special when considering that June 2020 registered a 30% increase over June 2019.
New furniture orders have now recorded 13 months of year-over-year growth.
“Year to date, new orders were up 51% over the first half of 2020 and up for 94% of the participants,” said Ken Smith, managing partner of Smith Leonard. “For comparison, new orders in the first 6 months of 2021 were up 37% over the first 6 months of 2019. We continue to think that the comparisons to 2020 for the rest of this year will be tough to beat.”
Smith noted that furniture shipments are being hampered by supply shortages. “Freight issues are a major problem, with container shortages continuing, causing significant price increases, if you can even get them,” Smith said. “Some are blaming some of the large retailers for tying up containers. Labor issues continue. We have read articles about how many are just not looking for jobs. Reasons include not only government stimulus and increases in unemployment checks, but also some have taken the opportunity to start their own small businesses. Some have decided to just retire, and some point to cost of daycare, making it better to just stay home. Others have pointed to the fear of contracting COVID-19.”
Backlogs continued to increase as orders in dollars exceed the dollar value of shipments. Backlogs were 153% higher in June than in June 2020, according to Smith Leonard.
“Expectations are for the overall economy to continue to expand, although at a slower rate, but still expectations are for over 4% into 2022,” Smith said. “We would think that the furniture business should continue its expansion as well, with shipments continuing to grow as backlogs are brought down. This would indicate that volume does not appear to be the issue. Profitability may be the problem as costs are going up faster than price increases can be put in place. It is hard to anticipate three months out, when products will be made, based on price lists being put out today.”