Furniture industry on gradual rise
Quarterly analysis indicates growth from 2016 into 2018.
The July survey of the office furniture industry by Michael A. Dunlap and Associates in Holland indicates industry growth at a “nice, steady pace.”
The overall July index score is 57.49, which Dunlap said is almost identical to the January overall index of 57.87. The average overall index is 54.93. The highest index ever recorded was 59.72 in July 2005. The lowest was 41.45 in April 2009 at the bottom of the recession.
“The (July) overall index is strong and remains above the 54.93 survey average,” Dunlap said. “We remain confident that 2017 will exceed 2016. I feel good about where the industry is going.”
The survey focuses on 10 key business activities, and respondents rate each area on a scale of one (the lowest) to 10 (the highest).
Industry Index Numbers quantify where the industry currently is performing. A score above 50 indicates improvement, and a score below 50 signifies a decrease in performance.
The July index saw a significant decrease in only two of the 10 index values. The July survey was the 51st survey conducted since it began in August 2004.
Gross sales rose sharply to 60.29 from 50.13 recorded in April, with an average of 57.93. Order backlog rose to 64.12 from 61, with an average of 57.36. Employment levels rose slightly to 54.29 from 53.04. The average is 52.49. Hours worked jumped to 58.33 from 51.82, with an average of 55.7.
Personal outlook rose to 64.29 from 63.91 in April, a significant increase from the average of 58.46. Raw material cost came up to 45.67 from 43.48, with an average of 45.02. Employee cost improved to 47.65 from 43.33, with an average of 46.6.
Capital expenditures declined to 62.06 from 64.5 in April, with an average of 56. Tooling expenditures slipped to 60.31 from 66. The average is 56.29. Capital expenditures fell only slightly to 62.06 from 64.5, with an average of 56.
With only two values declining and two remaining below the 50 mark, Dunlap said he is confident the industry will continue its steady upward trend.
“We maintain the opinion that the industry will continue to grow steadily during third and fourth quarters of 2017 and probably into 2018,” Dunlap said.
Dunlap added the most frequently cited perceived threats to the industry’s success are material costs and health care costs. Health care costs are the most commonly cited concern from respondents since the survey process was started.
The July 2017 MADA/OFI Trends survey was sent to more than 450 individuals involved in the commercial furniture industry’s manufacturing and suppliers from Africa, Asia, Australia, Europe, North America and South America.
Companies involved in the survey ranged from more than $1 billion to less than $500,000 in sales. Close to 60 percent of responses come from “C” level executives who are chairpersons, CEOs, COOs or presidents of their respective organizations. The survey repeats in October.