November 2022 Furniture Insights Report From Smith Leonard
Furniture World News Desk on
According to our most recent survey of residential furniture manufacturers and
distributors, the decline in orders continued again in September. New orders fell
26% compared to September 2021. The September 2021 orders were down 20%
from September 2020. As we have noted before, even comparing to 2019 is not
very realistic in a given month with all the price increases that have been instituted
especially up to September 2022. In September, new orders were down for 91% of
Year to date, new orders were down 29% from 2021 when they were down 21%
from 2020. Year to date, 2022 orders were down 6% from year-to-date 2019. Again,
with the price increases, that comparison is hard to really read other than probably
not a good result.
Shipments and Backlogs
Shipments continued to be positive working off the big backlogs that were built. Shipments in September were up 5% over
September 2021 though down a bit from August. Shipments were up in September for 71% of the participants. Last year, September
shipments were up 4% over September 2020.
Year to date, shipments were up 6% over 2021. Year to date shipments were
up for 70% of the participants. Year to date 2021 shipments for the nine months
were up 30% over 2020. But remember business was basically shut down for a
good two months in 2020. Shipment dollars were up 24% year to date over the
first nine months of 2019, again including effects of price increases.
Backlogs fell again in September dropping 40% from September 2021 and
another 6% from August. We hope most participants have now cleaned up their
backlogs so that they know what their real situation will be over the next couple
Receivables and Inventories
Receivable levels continue to be in line, up 4% over September 2021 and in line
with the 5% increase in shipments and 6% year to date.
Inventories continue to be an issue, up 42% from September 2021, though at
least dropping 2% from August levels. It will take a while to get them back in line
and rebalanced as we are concerned as to what kind of products are included
in the some of these inventories.
Factory and Warehouse Employees and Payroll
The levels of employees remained fairly stable as it has for several months
through September. Payrolls continued to climb up 11% from last September
and up 15% year to date. Again, that year to date increase includes a few more employees in some earlier months and significant
wage increases as well as some volume increases.
The Conference Board Consumer Confidence Index® decreased in November
after also losing ground in October. The Index now stands at 100.2 (1985=100),
down from 102.2 in October. The Present Situation Index—based on consumers’
assessment of current business and labor market conditions—decreased to
137.4 from 138.7 last month. The Expectations Index—based on consumers’
short-term outlook for income, business, and labor market conditions—declined
to 75.4 from 77.9.
“Consumer confidence declined again in November, most likely prompted by the
recent rise in gas prices,” said Lynn Franco, Senior Director of Economic
Indicators at The Conference Board. “The Present Situation Index moderated
further and continues to suggest the economy has lost momentum as the year
winds down. Consumers’ expectations regarding the short-term outlook
remained gloomy. Indeed, the Expectations Index is below a reading of 80, which
suggests the likelihood of a recession remains elevated.”
“Inflation expectations increased to their highest level since July, with both gas
and food prices as the main culprits. Intentions to purchase homes, automobiles,
and big-ticket appliances all cooled. The combination of inflation and interest rate
hikes will continue to pose challenges to confidence and economic growth into
Consumers’ assessment of current business conditions was mixed in November.
18.2% of consumers said business conditions were “good,” up from 17.7%
On the other hand, more consumers, 26.7%, said business conditions
were “bad,” up from 24.0%.
Consumers’ appraisal of the labor market was somewhat more favorable.
- 45.8% of consumers said jobs were “plentiful,” up from 44.8%.
- 13.0% of consumers said jobs were “hard to get,” unchanged from last
Expectations Six Month Hence
Consumers remain pessimistic about the short-term business conditions
outlook in November.
19.9% of consumers expect business conditions to improve, up slightly
- 22.7% expect business conditions to worsen, down from 24.3%.
Consumers were more downbeat about the short-term labor market outlook.
- 18.6% of consumers expect more jobs to be available, down from 19.5%.
- 21.4% anticipate fewer jobs, up from 20.8%.
Consumers were also more pessimistic about their short-term income prospects.
- 17.2% of consumers expect their incomes to increase, down from 19.6%.
- 16.6% expect their incomes will decrease, up from 15.2%.
Leading Economic Indicators
The Conference Board Leading Economic
Index® (LEI) for the U.S. decreased by
0.8% in October 2022 to 114.9
(2016=100), following a decline of 0.5% in
September. The LEI is now down 3.2%
over the six-month period between April
and October 2022, a reversal from its 0.5%
growth over the previous six months.
“The US LEI fell for an eighth consecutive
month, suggesting the economy is possibly
in a recession,” said Ataman Ozyildirim,
Senior Director, Economics, at The
Conference Board. “The downturn in the
LEI reflects consumers’ worsening outlook
amid high inflation and rising interest rates,
as well as declining prospects for housing
construction and manufacturing. The
Conference Board forecasts real GDP
growth will be 1.8% year-over-year in 2022,
and a recession is likely to start around
yearend and last through mid-2023.”
The Conference Board Coincident
Economic Index® (CEI) for the U.S.
increased by 0.2% in October 2022 to
109.3 (2016=100), after an increase of
0.1% in September. The CEI rose by 1.1%
over the six-month period from April to
October 2022, faster than its growth of
0.9% over the previous six-month period.
The Conference Board Lagging Economic
Index® (LAG) for the U.S. increased by
0.1% in October 2022 to 116.3 (2016 =
100), following a 0.8% increase in
September. The LAG is up 3.7% over the
six-month period from April to October
2022, faster than its growth of 3.1% over
the previous six-month period.
Existing-home sales retreated for the ninth straight month
in October, according to the National Association of
REALTORS®. All four major U.S. regions registered
month-over-month and year-over-year declines.
Total existing-home sales – completed transactions that
include single-family homes, townhomes, condominiums
and co-ops – decreased 5.9% from September to a
seasonally adjusted annual rate of 4.43 million in October.
Year-over-year, sales dropped by 28.4% (down from 6.19
million in October 2021).
Single-family home sales declined to a seasonally
adjusted annual rate of 3.95 million in October, down 6.4%
from 4.22 million in September and 28.2% from one year
ago. The median existing single-family home price was
$384,900 in October, up 6.2% from October 2021.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 480,000 units in October, down 2.0%
from September and 30.4% from the previous year. The median existing condo price was $331,000 in October, an annual increase
"More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher," said
NAR Chief Economist Lawrence Yun. "The impact is greater in expensive areas of the country and in markets that witnessed
significant home price gains in recent years."
Total housing inventory registered at the end of October was 1.22 million units, which was down 0.8% from both September and
one year ago (1.23 million). Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September
and 2.4 months in October 2021.
"Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers," Yun added. "In October, 24% of
homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an
average of 15.8%."
The median existing-home price for all housing types in October was $379,100, a gain of 6.6% from October 2021 ($355,700), as
prices rose in all regions. This marks 128 consecutive months of year-over-year increases, the longest-running streak on record.
Properties typically remained on the market for 21 days in October, up from 19 days in September and 18 days in October 2021.
Sixty-four percent of homes sold in October 2022 were on the market for less than a month.
First-time buyers were responsible for 28% of sales in October, down from 29% in both September 2022 and October 2021.
NAR's 2022 Profile of Home Buyers and Sellers – released earlier this month – found that the annual share of first-time buyers was
26%, the lowest since NAR began tracking the data.
According to Freddie Mac, the 30-year, conventional, fixed-rate mortgage was 6.90% in October, up from 6.11% in September. The
average commitment rate across all of 2021 was 2.96%.
Existing-home sales in the Northeast were down 6.6% from
September to an annual rate of 570,000 in October, a
decline of 23.0% from October 2021. The median price in
the Northeast was $408,700, an increase of 8.0% from the
Existing-home sales in the Midwest fell 5.3% from the
previous month to an annual rate of 1,080,000 in October,
falling 25.5% from the prior year. The median price in the
Midwest was $274,500, up 5.9% from October 2021.
In the South, existing-home sales declined 4.8% in October
from September to an annual rate of 1,980,000, a 27.2%
decrease from this time last year. The median price in the
South was $346,300, an increase of 8.0% from one year
Existing-home sales in the West dropped 9.1% from
September to an annual rate of 800,000 in October, down
37.5% from one year ago. The median price in the West was
$588,400, a 5.3% increase from October 2021.
New Residential Sales
Sales of new single‐family houses in October 2022 were at a seasonally adjusted annual rate of 632,000, according to estimates
released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This was 7.5% above the
revised September rate of 588,000, but was 5.8% below the October 2021 estimate of 671,000.
Compared to October 2021, sales were up 59.4% in the Northeast but down 26.5% in the Midwest, 0.3% in the South and 22.8%
in the West for the overall 5.8% decline.
The seasonally adjusted estimate of new houses for sale at the end of October was 470,000. This represents a supply of 8.9 months
at the current sales rate.
Privately‐owned housing starts in October were at a seasonally adjusted annual rate of 1,425,000. This was 4.2% below the revised
September estimate of 1,488,000 and was 8.8% below the October 2021 rate of 1,563,000. Single‐family housing starts in October
were at a rate of 855,000; this was 6.1% below the revised September figure of 911,000.
Single family starts were down 8.8% from October 2021 with starts down 1.9% in the Northeast, 14.6% in the Midwest, 16.8% in
the South and 36.4% in the West.
Privately‐owned housing completions in October were at a seasonally adjusted annual rate of 1,339,000. This was 6.4% below the
revised September estimate of 1,431,000, but was 6.6% above the October 2021 rate of 1,256,000. Single‐family housing
completions in October were at a rate of 961,000; this was 8.3% below the revised September rate of 1,048,000. For single unit
completions, all were up in all regions except the West.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in October on a seasonally adjusted basis, the same
increase as in September, according to the U.S. Bureau of Labor Statistics report. Over the last 12 months, the all-items index
increased 7.7% before seasonal adjustment.
The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing.
The energy index increased 1.8% over the month as the gasoline index and the electricity index rose, but the natural gas index
decreased. The food index increased 0.6% over the month with the food at home index rising 0.4%.
The index for all items less food and energy rose 0.3% in October, after rising 0.6% in September. The indexes for shelter, motor
vehicle insurance, recreation, new vehicles, and personal care were among those that increased over the month. Indexes which
declined in October included the used cars and trucks, medical care, apparel, and airline fares indexes.
The all-items index increased 7.7% for the 12 months ending October, this was the smallest 12-month increase since the period
ending January 2022. The all items less food and energy index rose 6.3% over the last 12 months. The energy index increased
17.6% for the 12 months ending October, and the food index increased 10.9% over the last year; all of these increases were smaller
than for the period ending September.
The U.S. Census Bureau announced advance estimates of U.S. retail and food services sales for October 2022, adjusted for
seasonal variation and holiday and trading-day differences, but not for price changes, were $694.5 billion, up 1.3% from the previous
month, and 8.3% above October 2021. Total sales for the August 2022 through October 2022 period were up 8.9% from the same
period a year ago.
Retail trade sales were up 1.2% from September 2022, and up 7.5% above last year. Gasoline stations were up 17.8% from October
2021, while food services and drinking places were up 14.1% from last year.
Total nonfarm payroll employment increased by 261,000 in October, and the unemployment rate rose to 3.7%, the U.S. Bureau of
Labor Statistics reported. Notable job gains occurred in health care, professional and technical services, and manufacturing.
The unemployment rate increased by 0.2 percentage point to 3.7% in October, and the number of unemployed persons rose by
306,000 to 6.1 million. The unemployment rate has been in a narrow range of 3.5% to 3.7% since March.
Durable Goods Orders and Factory Shipments
The U.S. Census Bureau reported new orders for manufactured durable goods in October, up seven of the last eight months,
increased 1.0%. This followed a 0.3% September increase. Excluding transportation, new orders increased 0.5%. Excluding
defense, new orders increased 0.8%. Transportation equipment, up six of the last seven months, led the increase, $2.0 billion or
2.1% to $97.8 billion.
Shipments of manufactured durable goods in October, up seventeen of the last eighteen months, increased $1.1 billion or 0.4% to
$275.4 billion. This followed a 0.3% September increase. Machinery, up nineteen of the last twenty months, led the increase, $0.5
billion or 1.3% to $38.9 billion.
New orders for furniture and related products in September increased 0.1% and were up 1.8% year to date. Shipments of these
products, which include products other than residential furniture, increased 5.5% in September versus September 2021 and 6.2%
year to date.
The results of our survey for September 2022 continued to reflect the slowdown of business overall. Approximately 91% of our participants reported lower new orders for September as well as year-to-date compared to last year. New orders were down 26% for the month versus September 2021 (September 2021 orders were down 20% from September 2020). For the nine months ending September 2022, new orders were down 29% from 2021 (New orders were down 21% in the 2021 to 2020 comparison).
The good news was that shipments continued to hold up due to the large backlogs that had built up. Shipments were up 5% over September 2021 with 71% reporting positive increases. Year-to-date shipments were up 6% compared to 2021 when they were up 30% over the first nine months of 2020. So, the smaller percentage increase in 2022 is really a nice increase.
Backlogs were down 40% from September 2021 and fell 6% from August. Yet the total backlogs remain, for many, at fairly high levels. This should help weather the storm of recessions or whatever it’s called for some time.
The other stats were still in good shape especially receivables, though inventories remain too high.
The Conference Board’s Consumer Confidence Index decreased again in November with both the indexes of the Present Situation and Expectations falling. “Consumer confidence declined again in November, most likely prompted by the recent rise in gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.
Existing-home sales fell for the ninth straight month in October, according to the National Association of REALTORS®. All four major U.S. regions registered month-over-month and year-over-year declines.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 5.9% from September. Year-over-year, sales dropped by 28.4% (down from 6.19 million in October 2021).
Single-family home sales declined 6.4% in September and 28.2% from one year ago. The median existing single-family home price was $384,900 in October, up 6.2% from October 2021.
Sales of new single‐family houses in October 2022 were 7.5% above September but were 5.8% below the October 2021 estimate.
Compared to October 2021, sales were up 59.4% in the Northeast but down 26.5% in the Midwest, 0.3% in the South and 22.8% in the West for an overall 5.8% decline.
The seasonally adjusted estimate of new houses for sale at the end of October was 470,000, a supply of 8.9 months at the current sales rate.
Advance estimates of U.S. retail and food services sales for October 2022 were up 1.3% from the previous month, and 8.3% above October 2021. Total sales for the August 2022 through October 2022 period were up 8.9% from the same period a year ago. Retail trade sales were up 1.2% from September 2022, and up 7.5% above last year. Gasoline stations were up 17.8% from October 2021, while food services and drinking places were up 14.1% from last year.
Sales at furniture and home furnishings stores were up 0.4% from October 2021 and up 1.6% year to date. But remember that sales at these stores in October 2021 were up 11.9% over sales in October 2020 and up 29.1% over year-to-date 2020 sales. The year-to-date sales increase of 2021 over 2020 was the 5th highest of all categories.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in October on a seasonally adjusted basis, the same increase as in September. Over the last 12 months, the all-items index increased 7.7% before seasonal adjustment.
The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. The food index increased 0.6% over the month with the food at home index rising 0.4%.
Total nonfarm payroll employment increased by 261,000 in October, and the unemployment rate rose to 3.7%. Notable job gains occurred in health care, professional and technical services, and manufacturing.
The Conference Board Leading Indicators report noted that real GDP growth will be 1.8% year over year in 2022, and a recession is likely to start around year-end and last through mid-2023.
We are hearing various thoughts on the current state of business. Some are still seeing declines, however one might measure them, while others seemed to have maybe “bottomed out.” That is, they felt the slowdown in orders that was somewhat expected then beginning May-June-July began to see further declines. Since then, some feel that there is maybe a new level of business that seems to be somewhat flat or increasing slightly.
Clearly, inflation is bothering the consumer at almost all levels, especially at the lower end and the uncertainty of the stock market is affecting the middle and upper middle.
The midterm elections did not move the needle in Washington as much as many hoped or feared, depending on which side you are on. We won’t get into politics, but it truly is amazing how some of the voters elect certain candidates.
We did hear that Black Friday sales seemed to be good for most all of retail and some reports that included furniture.
At market, one client suggested that he reads our newsletter pretty much every month but lately he basically has no clue what we are saying lately. I explained that that is sometimes the way I feel when writing it. So, for that we apologize. It’s just hard to make sense of comparisons to periods of shutdowns, rising prices at unheard of levels, crazy increases in business that were not sustainable and now likely reduction of prices as certain costs have come down. We just hope that the margins gained during these times are not given back in the interest of chasing volume. Another subject for another day.
This Furniture Insights® newsletter report has been re-published with
the permission of Smith Leonard PLLC an independent member of the BDO
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