Furniture Industry Trend Still Down
The Business and Institutional Furniture Manufacturer's Association, in a new outlook prepared by DRI-WEFA, once again downgraded expectations for 2002. The trade association anticipates industrywide shipments for the year will now register a 20 percent decline over 2001 to a little more than $8.7 billion — representing the worst-ever single-year decline for the industry.
That's a downgrade from an earlier 18 percent decline anticipated in BIFMA's last outlook issued in August. Weaker-than-expected third quarter sales industrywide pushed the outlook downward, BIFMA Executive Director Tom Reardon said.
"Things aren't coming back in the short-term as quickly as anticipated," Reardon said. "There's a little pain in the short-term but hopefully it will lead to better things next year."
A cautious corporate investment outlook and weak office construction nationwide will continue to curtail near-term order and shipment volumes, BIFMA said.
Economic and political uncertainty continue to restrain economic recovery. Continued softness in third quarter furniture orders suggest that the industry's recovery will be further delayed," BIFMA stated in its new outlook issued last week.
The 2002 decline is on top of the collective 17.4 percent drop furniture manufacturers suffered in 2001, when shipments went from $13.2 billion to $10.9 billion.
On the positive side, BIFMA does foresee a little better recovery in 2003 than previously predicted, with a "modest improvement" of 8 percent in industrywide shipments next year over 2002 levels, to $9.4 billion.
BIFMA in August forecast a 7 percent increase in shipments for 2003.
Economic consultants with DRI-WEFA say service-sector employment has stabilized during 2002 and is expected to grow toward the end of the year along with overall employment. Improving corporate profits, which bottomed out toward the end of 2001, also will help to re-generate product demand.
But new office construction remains weak and will continue to decline through mid-2003 "before any signs of a recovery materialize," BIFMA said. The weakness in office construction will serve as the primary drag on furniture demand through mid-year, according to the new outlook.
Through the first eight months of 2002, industrywide shipments totaled $5.92 billion, down 23 percent from the $7.69 billion through the same period in 2001 and off 32 percent from the $8.75 billion of 2000, just prior to the beginning of the industry downturn