Office furniture industry index on the rise
Analyst says industry is performing its best since 2008-09.
The Michael A. Dunlap & Associates 37th quarterly survey of the office furniture industry completed in July shows its activity level is up significantly from the last survey in April.
“I think that the industry is doing better than any time since the 2008-2009 recession. What we described as flat three months ago is now better described as climbing,” said Dunlap, whose industry consulting business is based in Holland. “This is good news. The overall index is the highest since October 2011 and is well above the survey average.”
The July overall survey index is 55.07, which is up significantly from April, when it was 52.84. The highest recorded index was 59.72 in July 2005; the lowest was 41.45 in April 2009. The average overall index is 54.30 since the survey started in August 2004.
The Dunlap survey reflects the current business activity level of the office furniture industry and its suppliers in 10 key business activities, with respondents rating each on a scale of 1 to 10. The higher the score, the better that segment of the industry is doing. An index score of 50 means there has been no change in that quarter.
The survey goes to more than 750 individuals involved with office furniture manufacturing and suppliers from around the world. More than half of the survey responses come from top executives.
“The improvements in both gross sales and order backlog index values are good indicators that the industry is improving nicely,” said Dunlap. “Employment levels and hours worked index values also improved. Both manufacturers and suppliers report similar experiences.
“The steady index in capital expenditures, lower reported tooling expenditures and declines in new product development are mixed when compared to their 37 survey averages, which is disconcerting. The reduction in new product development is typical during the 2nd quarter,” added Dunlap.
He said raw material cost and employee cost index values “are always a concern and rarely show much improvement, but the improvements in both are very encouraging. I am thrilled to see the increase of the index in personal outlook. It’s the best in more than two years.”
Dunlap is of the opinion that “the industry will continue to experience modest growth in the third quarter of 2013 and then accelerate during the fourth quarter. I think that 2014 will be one of the industry’s best in a decade. It will be a good year for the industry.”
The July survey specifics are:
- Gross shipments jumped to 56.59, but still lower than the 37-survey average of 57.54 and order backlog recorded 60.91, which is also significantly higher than the 37-survey average of 56.57.
- The employment index rose to 54.22, well above the 37-survey average of 51.76. The hours worked index declined to 51.54 and is below the 37-survey average of 55.35.
- The capital expenditures remained steady at 54.42 and tooling expenditures slipped to 55.58. These compare to their 37-survey averages of 55.30 and 55.60, respectively.
- New product development fell to 61.90, somewhat below the 37-survey average of 63.37.
- Raw material costs improved to 47.67, much better than the 37-survey average is 43.91. Employee costs also improved to 47.05. The 37-survey average is 46.88.
- The personal outlook index jumped to 60.44 from 54.73 and is well above the 37-survey average of 56.42.