Orders, shipments drop in Oct.
By Janice Chamberlain -- Furniture Today, December 24, 2001
HIGH POINT — U.S. residential furniture factories took a triple whammy in October, with shipments and orders both down 16% and order backlogs off 21% from October 2000, according to BDO Seidman's latest survey of manufacturers.
Things looked a little better compared to September 2001. October orders of $1.9 billion were even with September orders, and shipments were flat at $2 billion. The September-to-October order backlog slipped 3% to $1.9 billion.
BDO estimated that shipments year-to-date through October were $20.6 billion, a drop of 10% compared with the first 10 months of 2000. New orders were pegged at $20.2 billion, also a 10% drop, measured against $22.6 billion for the January through October period of 2000.
Assessing the remainder of 2001, Ken Smith, director of BDO's furniture industry services, said in the company's Furniture Insights newsletter that November should show a smaller decline in orders than October. The accounting and consulting firm believes the declines for the rest of the fourth quarter will result in 2001 shipments being down about 9%.
Order backlogs continue to be very low. The October-to-October slippage of 21% was about the same as the September-to-September drop, which was 22%.
BDO cited several differences in the current economy when compared with the recession of the early '90s. While unemployment is high, it is not expected to reach the 7.8% level of 1992. Additionally, oil prices are low. On the downside are the recent terrorist attacks and anthrax scares.
Smith noted housing has remained strong and the stock market appears to be recovering. He added that people are still buying and the industry just needs them to buy more.
Looking ahead, the accounting and consulting firm sees a soft first half in 2002, then a single-digit upswing in shipments in the second half.
"Our latest forecast for 2002 indicates that furniture is likely to follow expectations for the economy in general," said Smith,
"The forecast for the first half of 2002 indicates a decline in shipments of about 1%, with the second half picking up substantially to a 6% to 7% increase in shipments. This would result in a yearly total increase of slightly less than 3%," he said.
In the coming 12 months, BDO projects monthly shipments ranging from a low of $1.8 billion, expected in July of next year, to a high of $2.5 billion in September 2002.
The BDO forecast is slightly more conservative than the latest forecast from the American Furniture Manufacturers Assn., which estimates a 10.3% decline in furniture shipments in 2001 and projects a 3.9% increase in 2002. The AFMA forecast model includes input from the national economic forecast directed by Saul Hymans at the University of Michigan.
| In billions of current dollars | Change from Sept. '01 | Oct. '00 | |
|---|---|---|---|
| Orders | $1.903 | 0% | -16% |
| Shipments | $1.994 | 0% | -16% |
| Order backlog (r) | $1.946 | -3% | -21% |
| January - October | Change from 2000 | ||
| Orders | $20.240 | -10% | |
| Shipments | $20.569 | -10% | |
| (r) Revised | |||
| Source: BDO Seidman | |||
