Bucking Trend, Dunlap Index Steady
Daniel Schoonmaker

SPRING LAKE — For the first time, the Michael A. Dunlap & Associates Office Furniture Industry Survey showed virtually no change quarter-to-quarter, indicating no sign of the historical declines associated with the post-launch season.

Now in its 10th edition, the quarterly study measures the mood and activity of the domestic office furniture industry and its suppliers, focusing on 10 key factors and an Industry Index Number, all on a 100-point scale.

The October 2006 study, made public this week, produced the second highest index in the survey’s three-year history: 57.99. Of particular interest, this is nearly identical to the slightly lower 57.97 of the previous quarter, marking the first time autumn optimism has exceeded that of the post-NeoCon summer season.

“The industry continues to build on a very solid foundation,” said Michael Dunlap, the firm’s principal. “Our interpretation is that the industry is still improving. The continued strong sales and increasing backlog, combined with a solid employment index, are even better news.”

He pointed to strong secondary indicators such as capital expenditures (58.17) and tooling (58.50). The tooling activity index is up nearly four points from the year-ago quarter, although it is down slightly from July.

“These activities, combined with the record high levels of enthusiasm for the industry, are probably the best signs of continued optimism,” said Dunlap. “And the publicly traded companies’ results during the past three months confirm it.”

The Personal Outlook Index produced an all-time high of 66.87, well above the 63.80 in July and the 63.53 of the year-ago quarter. Perhaps buoying this optimism, all of the publicly traded furniture companies, particularly locally based Steelcase Inc. and Herman Miller Inc., are coming off quarters of double-digit growth in sales and profits.

Rounding out the survey, the index for backlog (65.08) rose slightly, while the gross shipments (63.44), employment levels (55.70), hours worked (61.33) and new product development (62.90) all fell slightly. The only indexes continuing to produce “negative” index values below 50 are raw material costs (42.50) and employee costs (46.72), both of which rose slightly.

Respondents cited increased metals prices, health care costs, high fuel costs and related items such as plastic, polyurethane foam, and skyrocketing transportation and travel costs as the “largest threats to the company’s growth.”

The “largest threats to the industry” remain low-cost countries and a lack of confidence in the global economy.     BJX