MONTHLY RESULTS

New Orders

In response to our newest survey of residential furnishings producers and
distributors, new orders had been up 13% in September 2023 in comparison with orders in
September 2022. As soon as once more, whereas showing to be a constructive, we have to
do not forget that in September 2022, new orders had been down 26% in comparison with
September 2021. The September 2021 and 2020 comparisons had been additionally troublesome
since 2020 was such an abnormally excessive progress interval. For the September 2023
improve, some 72% of the individuals reported elevated orders.

Yr to this point, new orders had been up 1% over 2022, once they had been down 29%
in comparison with 2021. New orders yr to this point had been really down for some 63% of
the individuals in 2023.

Shipments and Backlogs

Shipments in September 2023 had been down 20% in comparison with September 2022 once they
had been up 5% over the previous September. Yr to this point, shipments had been down 18%
in comparison with 9 months of 2022 with some 78% of the individuals reporting decrease
shipments than 2022. In 2022, year-to-date shipments had been up 26%. Shipments
have clearly not adopted orders because the pandemic as backlogs had been constructed to
unprecedented ranges for many and most of the 2022 and 2023 shipments have
been made out of massive carryover backlogs.

Receivables and Inventories

Receivable ranges had been down 26% in comparison with September 2022, so considerably in
line with year-to-date shipments and month-to-month shipments. We’d anticipate these
ranges to get again in line within the subsequent few months. Stock ranges continued
to fall, dropping 2% from August and 26% under final yr ranges.

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Manufacturing unit and Warehouse Workers and Payroll

Manufacturing unit and warehouse workers had been about even with August and down 7% yr
to this point. The payrolls for these workers had been down 7% from final yr and down
8% yr to this point. The payrolls appear in keeping with the variety of workers.

NATIONAL

Shopper Confidence

The Convention Board Shopper Confidence Index® elevated in November to 102.0
(1985=100), up from a downwardly revised 99.1 in October. The Current
Scenario Index—based mostly on customers’ evaluation of present enterprise and labor
market situations—ticked down barely to 138.2 (1985=100), from 138.6. The
Expectations Index—based mostly on customers’ short-term outlook for earnings,
enterprise, and labor market situations—rose to 77.8 (1985=100) in November, up
from its downwardly revised studying of 72.7 in October.

The report indicated that “Regardless of this month’s enchancment, the Expectations
Index remained under 80 for a 3rd consecutive month—a degree that
traditionally alerts a recession inside the subsequent yr. Whereas shopper fears of
an impending recession abated barely—to the bottom ranges seen this
yr—round two-thirds of customers surveyed in November nonetheless understand a
recession to be “considerably” or “very possible” to happen over the subsequent 12 months.
That is in step with the brief and shallow recession we anticipate within the
first half of 2024.”

“Shopper confidence elevated in November, following three consecutive months
of decline,” mentioned Dana Peterson, Chief Economist at The Convention Board.
“This enchancment mirrored a restoration within the Expectations Index, whereas the
Current Scenario Index was largely unchanged. November’s improve in shopper
confidence was concentrated primarily amongst homeowners aged 55 and up; by
distinction, confidence amongst homeowners aged 35-54 declined barely. Basic
enhancements had been seen throughout the spectrum of earnings teams surveyed in
November.

“Shopper expectations for the subsequent six months recovered in November,
reflecting improved confidence about future enterprise situations, job
availability, and incomes. In comparison with final month, expectations that curiosity
charges will rise within the yr forward ticked down, however customers’ outlook for
inventory costs continued to weaken in November. In the meantime, common 12-month
inflation expectations receded again to five.7% after a one-month uptick to five.9%.
Customers’ views of their anticipated household monetary state of affairs, six months
therefore (not included in calculating the Expectations Index) recovered in
November, after ticking down for the previous two months. Shopping for plans for autos,
houses, and big-ticket home equipment trended downward on a six-month foundation—maybe
reflecting the affect of elevated rates of interest.”

Current Scenario
Customers’ evaluation of present enterprise situations was, on steadiness, barely
extra constructive in November.

• 
  19.8% of customers mentioned enterprise situations had been “good,” up from 18.3% in
  October.
• Nevertheless, 19.5% mentioned enterprise situations had been “unhealthy,” up from 18.8%.

Customers’ appraisal of the labor market was blended in November.

• 
  39.3% of customers mentioned jobs had been “plentiful,” up barely from 37.9% in
  October.
• 
  Nevertheless, 15.4% of customers mentioned jobs had been “onerous to get,” up from 14.1%.

Expectations Six Months Therefore

Customers had been much less pessimistic in regards to the short-term enterprise situations
outlook in November.

• 
  17.3% of customers anticipate enterprise situations to enhance, up from 15.5% in
  October.
• 19.5% anticipate enterprise situations to worsen, down from 20.9%.

Customers’ evaluation of the short-term labor market outlook was barely extra
optimistic in November.

• 
  16.1% of customers anticipate extra jobs to be accessible, up from 15.3% in
  October.
• 19.6% anticipate fewer jobs, down barely from 19.7%.

Customers’ evaluation of their short-term earnings prospects improved in
November.

• 
  17.2% of customers anticipate their incomes to extend, up from 15.6% in
  October.
• 12.1% anticipate their incomes to lower, down from 13.4%.

Customers’ evaluation of their Household’s Present Monetary Scenario improved
barely in October.

Main Financial Indicators

The Convention Board Main Financial Index® (LEI) for the U.S. fell by 0.8%
in October 2023 to 103.9 (2016=100), following a decline of 0.7% in September.
The LEI contracted by 3.3% over the six-month interval between April and October
2023, a smaller lower than its 4.5% contraction over the earlier six
months (October 2022 to April 2023).

“The US LEI trajectory remained damaging, and its six- and twelve-month progress
charges additionally held in damaging territory in October,” mentioned Justyna Zabinska-La
Monica, Senior Supervisor, Enterprise Cycle Indicators, at The Convention Board.
“Among the many main indicators, deteriorating customers’ expectations for
enterprise situations, decrease ISM® Index of New Orders, falling equities, and
tighter credit score situations drove the index’s most up-to-date decline. After a pause
in September, the LEI resumed signaling recession within the close to time period. The
Convention Board expects elevated inflation, excessive rates of interest, and
contracting shopper spending—as a result of depleting pandemic saving and obligatory
pupil mortgage repayments—to tip the US financial system into a really brief recession. We
forecast that actual GDP will develop by simply 0.8% in 2024.

The Convention Board Coincident Financial Index® (CEI) for the U.S. was
unchanged in October 2023 at 110.8 (2016=100), however the index is under its
September’s degree after a downward revision. The CEI is now up 0.9% over the
six- month interval between April and October 2023, in comparison with 0.4% progress over
the earlier six months. The CEI’s element indicators—payroll employment,
private earnings much less switch funds, manufacturing and commerce gross sales, and
industrial manufacturing—are included among the many information used to find out recessions
within the US. Three out of 4 elements of the index superior in October, with
private earnings much less switch funds being the strongest contributor,
adopted by manufacturing and commerce gross sales and workers on nonagricultural
payroll. Industrial manufacturing was the one damaging contributor within the month.

The Convention Board Lagging Financial Index® (LAG) for the U.S. improved by
0.1% in October 2023 to 118.6 (2016 = 100), following the identical charge of
improve as in September. The LAG is up barely by 0.3% over the six-month
interval from April to October 2023, down three-fold from its 0.9% progress over
the earlier six months.

Gross Home Product

Actual gross home product (GDP) elevated at an annual charge of 5.2% within the
third quarter of 2023, in response to the “second” estimate launched by the
Bureau of Financial Evaluation. Within the second quarter, actual GDP elevated 2.1%

The GDP estimate launched right this moment relies on extra full supply information than
had been accessible for the “advance” estimate issued final month. Within the advance
estimate, the rise in actual GDP was 4.9%.

The rise in actual GDP mirrored will increase in shopper spending, personal
stock funding, exports, state and native authorities spending, federal
authorities spending, residential mounted funding, and nonresidential mounted
funding. Imports elevated.

HOUSING

Current-Dwelling Gross sales

Current-home gross sales dropped in October, in response to the Nationwide Affiliation
of REALTORS®. Among the many 4 main U.S. areas, gross sales slid within the Northeast,
South and West however had been unchanged within the Midwest. All 4 areas skilled
year-over-year gross sales declines.

Complete existing-home gross sales – accomplished transactions that embrace single-family
houses, townhomes, condominiums and co-ops – fell 4.1% from September to a
seasonally adjusted annual charge of three.79 million in October. Yr-over- yr,
gross sales tumbled 14.6%.

Single-family residence gross sales declined to a seasonally adjusted annual charge of three.38
million in October, down 4.2% from 3.53 million in September and 14.6% from
the earlier yr. The median present single-family residence value was $396,100
in October, up 3.0% from October 2022.

Current condominium and co-op gross sales recorded a seasonally adjusted annual
charge of 410,000 items in October, down 2.4% from September and 14.6% from one
yr in the past. The median present rental value was $356,000 in October, up 7.6%
from the prior yr

“Potential residence patrons skilled one other troublesome month because of the
persistent lack of housing stock and the very best mortgage charges in a
era,” mentioned NAR Chief Economist Lawrence Yun. “A number of affords, nevertheless,
are nonetheless occurring, particularly on starter and mid-priced houses, whilst value
concessions are taking place within the higher finish of the market.”

Complete housing stock registered on the finish of October was 1.15 million
items, up 1.8% from September however down 5.7% from one yr in the past (1.22 million).
Unsold stock was at a 3.6-month provide on the present gross sales tempo, up from
3.4 months in September and three.3 months in October 2022.

The median existing-home value for all housing varieties in October was $391,800,
a rise of three.4% from October 2022 ($378,800). All 4 U.S. areas
registered value will increase.

“Whereas circumstances for patrons stay tight, residence sellers have performed effectively as
costs proceed to rise year-over-year, together with a brand new all-time excessive for the
month of October,” Yun mentioned. “In actual fact, a typical house owner has accrued
greater than $100,000 in housing wealth over the previous three years.”

First-time patrons had been accountable for 28% of gross sales in October, up from 27% in
September and similar to October 2022.
NAR’s 2023 Profile of Dwelling Patrons and Sellers
– launched earlier this month – discovered that the annual share of first-time
patrons was 32%.

In response to Freddie Mac, the mortgage charge averaged 7.44% as of November 16.
That is down from 7.50% the earlier week however up from 6.61% one yr in the past.

“Fortuitously, mortgage charges have fallen for the third straight week, stirring
up shopping for curiosity,” Yun added. “Although restricted now, anticipate housing stock
to enhance after this winter and heading into the spring. Extra stock will
lead to extra residence gross sales.

Regional

Current-home gross sales within the Northeast dipped 4.0% from September to an annual
charge of 480,000 in October, down 15.8% from October 2022. The median value in
the Northeast was $439,200, up 7.5% from the earlier yr.

At an annual charge of 930,000 in October, existing-home gross sales within the Midwest
had been unchanged from the prior month however down 13.9% from one yr in the past. The
median value within the Midwest was $285,100, up 4.2% from October 2022.

Current-home gross sales within the South fell 7.1% from September to an annual charge of
1.69 million in October, a decline of 14.6% from the earlier yr. The median
value within the South was $357,700, up 3.5% from final yr.

Within the West, existing-home gross sales decreased 1.4% from the prior month to an
annual charge of 690,000 in October, down 14.8% from one yr in the past. The median
value within the West was $602,200, up 2.3% from October 2022.

New Residential Gross sales

Gross sales of recent single‐household homes in October 2023 had been at a seasonally
adjusted annual charge of 679,000, in response to estimates launched collectively by
the U.S. Census Bureau and the Division of Housing and City Growth.
This was 5.6% under the revised September charge of 719,000 however was 17.7% above
the October 2022 estimate of 577,000.

The median gross sales value of recent homes bought in October 2023 was $409,300. The
common gross sales value was $487,000.

The seasonally‐adjusted estimate of recent homes on the market on the finish of October
was 439,000. This represents a provide of seven.8 months on the present gross sales charge.

Gross sales had been up in all 4 areas of the nation with gross sales up 19.2% within the
South and 18.9% within the West.

Housing Begins

Privately‐owned housing begins in October had been at a seasonally adjusted annual
charge of 1,372,000. This was 1.9% above the revised September estimate of
1,346,000 however was 4.2% under the October 2022 charge of 1,432,000. Single‐household
housing begins in October had been at a charge of 970,000; this was 0.2% above the
revised September determine of 968,000.

In comparison with October 2022, single household begins had been up 13.1% with begins up
9.8% within the Northeast, 9.1% within the South and 46.0% within the West, whereas down
11.5% within the Midwest.

Housing Completions

Privately‐owned housing completions in October had been at a seasonally adjusted
annual charge of 1,410,000. This was 4.6% under the revised September estimate
of 1,478,000 however was 4.6% above the October 2022 charge of 1,348,000.
Single‐household housing completions in October had been at a charge of 993,000; this
was 0.9% under the revised September charge of 1,002,000. The October charge for
items in buildings with 5 items or extra was 408,000.

In comparison with October 2022, single household completions had been up 2.0% with
completions up 16.7% within the Northeast and eight.9% within the South whereas dropping
29.0% within the Midwest and 1.9% within the West.

OTHER NATIONAL

Retail Gross sales

Advance estimates of U.S. retail and meals providers gross sales for October 2023,
adjusted for seasonal variation and vacation and trading- day variations, however
not for value modifications, had been $705.0 billion, down 0.1% from the earlier month,
and up 2.5% above October 2022. Complete gross sales for the August 2023 by
October 2023 interval had been up 3.1% from the identical interval a yr in the past. The August
2023 to September 2023 p.c change was revised from up 0.7% to up 0.9%.

Retail commerce gross sales had been down 0.2% from September 2023, and up 1.6% above final
yr. Gasoline stations had been down 7.5% from final yr (primarily as a result of drops
in gasoline costs), whereas nonstore retailers had been up 7.6% from October 2022.

Gross sales at furnishings and residential furnishings shops had been down 11.8% for the month,
bringing yr to this point gross sales to a decline of 5.2%.

Shopper Costs

The Shopper Value Index for All City Customers (CPI-U) was unchanged in
October on a seasonally adjusted foundation, after rising 0.4% in September,
in response to the U.S. Bureau of Labor Statistics report. During the last 12
months, the all-items index elevated 3.2% earlier than seasonal adjustment.

The index for shelter continued to rise in October, offsetting a decline in
the gasoline index and ensuing within the seasonally adjusted index being
unchanged over the month. The power index fell 2.5% over the month as a 5.0%
decline within the gasoline index greater than offset will increase in different power
element indexes. The meals index elevated 0.3% in October, after rising 0.2%
in September. The index for meals at residence elevated 0.3% over the month whereas
the index for meals away from residence rose 0.4%.

The index for all gadgets much less meals and power rose 0.2% in October, after
rising 0.3% in September. Indexes which elevated in October embrace lease,
house owners’ equal lease, motorized vehicle insurance coverage, medical care, recreation,
and private care. The indexes for lodging away from residence, used automobiles and
vans, communication, and airline fares had been amongst those who decreased over
the month.

The all gadgets index rose 3.2% for the 12 months ending October, a smaller
improve than the three.7% improve for the 12 months ending September. The all
gadgets much less meals and power index rose 4.0% over the past 12 months, its
smallest 12-month change because the interval ending in September 2021. The power
index decreased 4.5% for the 12 months ending October, and the meals index
elevated 3.3% over the past yr.

Employment

Complete nonfarm payroll employment elevated by 150,000 in October, and the
unemployment charge modified little at 3.9%, in response to the U.S. Bureau of
Labor Statistics report. Job positive aspects occurred in well being care, authorities, and
social help. Employment declined in manufacturing as a result of strike
exercise.

Each the unemployment charge, at 3.9%, and the variety of unemployed individuals, at
6.5 million, modified little in October. Nevertheless, since their latest lows in
April, these measures are up by 0.5 proportion level and 849,000, respectively

In October, the variety of long-term unemployed (these jobless for 27 weeks or
extra) was little modified at 1.3 million. The long- time period unemployed accounted
for 19.8% of all unemployed individuals.

Sturdy Items Orders and Manufacturing unit Shipments

Sturdy Items Orders within the U. S. declined by 5.4%, or $16 billion, to $279.4
billion in October, the Census Bureau reported. This studying adopted the 4.6%
improve recorded in September and got here in worse than the market expectation
for a contraction of three.1%.

“Excluding transportation, new orders had been nearly unchanged,” the press
launch learn. “Excluding protection, new orders decreased 6.7%. Transportation
tools, additionally down three of the final 4 months, drove the lower, $16.0
billion, or 14.8%, to $92.1 billion.”

Govt Abstract

As soon as once more, the outcomes of our survey require taking extra historical past into
account. New orders in September had been up 13% over September 2022. However
September 2022 orders had been down 26%. As with the earlier surveys, comparisons
to 2021 and 2020 are much more troublesome. Yr to this point, new orders for the
first 9 months had been up about 1%.

Shipments had been down 20% in September 2023 from 2022 and down 18% for the yr
to this point. The September 2022 shipments had been up 5% over 2021 and up 6% yr to
date. The cargo comparisons are troublesome to take care of p.c modifications as
2020 shipments had been up considerably, setting the bar very excessive. General
although, shipments in {dollars} are forward for the yr over order {dollars}. All of
because of this shipments have continued to tug from the backlogs. Plus, the
improve in shipments in 2022 was additionally so massive because of the extraordinarily excessive
backlogs, the comparisons of 23 to 22 usually are not what we might usually anticipate.
Hopefully, all of that’s complicated sufficient.

Backlogs really elevated a bit over August however had been down 43% from September
2022. It seems that backlogs are attending to one thing nearer to pre-pandemic
ranges if one can decide how a lot value will increase are included within the
numbers.

The opposite stats are no less than considerably in keeping with expectations as you possibly can see
from the total report.

Nationwide

Shopper Confidence

The Convention Board Shopper Confidence Index® elevated in November to
102.0, up from a downwardly revised 99.1 in October. The Current Scenario
Index—based mostly on customers’ evaluation of present enterprise and labor market
situations—ticked down barely to 138.2, from 138.6. The Expectations
Index—based mostly on customers’ short-term outlook for earnings, enterprise, and labor
market situations—rose to 77.8 in November, up from its downwardly revised
studying of 72.7 in October.

The report indicated that “Regardless of this month’s enchancment, the Expectations
Index remained under 80 for a 3rd consecutive month—a degree that
traditionally alerts a recession inside the subsequent yr. Whereas shopper fears of
an impending recession abated barely, round two-thirds of customers
surveyed in November nonetheless understand a recession to be “considerably” or “very
possible” to happen over the subsequent 12 months. That is in step with the brief
and shallow recession we anticipate within the first half of 2024.”

Housing

The housing outcomes had been considerably blended as whole present houses and
single-family houses had been down 14.6% from October 2022. Single-family gross sales in
October 2022 had been down 28.2% from October 2021. Whereas new residential
single-family gross sales had been up 17.7% from a yr in the past, the amount of gross sales of each
present and new gross sales was off considerably. The general decline was blamed
totally on decrease inventories of houses on the market in addition to the very best
mortgage charges in a era.

Different

Advance estimates of U.S. retail and meals providers gross sales for October 2023,
had been $705.0 billion, down 0.1% from the earlier month, and up 2.5% above
October 2022. Complete gross sales for the August 2023 by October 2023 interval had been
up 3.1% from the identical interval a yr in the past.

Retail commerce gross sales had been down 0.2% from September 2023, and up 1.6% above final
yr. Gasoline stations had been down 7.5% from final yr (primarily as a result of drops
in gasoline costs), whereas nonstore retailers had been up 7.6% from October 2022.

Gross sales at furnishings and residential furnishings shops had been down 11.8% for the month,
bringing year-to-date gross sales to a discount of 5.2%.

The Shopper Value Index for All City Customers (CPI-U) was unchanged in
October on a seasonally adjusted foundation, after rising 0.4% in September.
During the last 12 months, the all-items index elevated 3.2% earlier than seasonal
adjustment.

The index for shelter continued to rise in October, offsetting a decline in
the gasoline index. The power index fell 2.5% over the month as a 5.0%
decline within the gasoline index greater than offset will increase in different power
element indexes. The meals index elevated 0.3% in October, after rising 0.2%
in September.

The all gadgets much less meals and power index rose 4.0% over the past 12 months,
its smallest 12-month change because the interval ending in September 2021. The
power index decreased 4.5% for the 12 months.

Actual gross home product (GDP) elevated at an annual charge of 5.2% within the
third quarter of 2023, in response to the “second” estimate launched by the
Bureau of Financial Evaluation.

The rise in actual GDP mirrored will increase in shopper spending, personal
stock funding, exports, state and native authorities spending, federal
authorities spending, residential mounted funding, and nonresidential mounted
funding. Imports elevated.

Ideas

Regardless of the issue of creating sense of the outcomes of our surveys, we
assume the present enterprise ranges in residential furnishings are again from the
unprecedented heights we noticed submit the beginning of the COVID pandemic. Everyone seems to be
not in the identical place, as some nonetheless have some backlogs to work down for a
a part of 2024 shipments, however most appear again to extra regular supply occasions.

Incoming enterprise appears slower, and a few would name it spotty, providing you with the
feeling every now and then that enterprise is beginning to degree out to extra
regular ranges, after which it slows down once more. All of the nationwide financial information,
for probably the most half, continues to say that we’re nonetheless going to have no less than a
delicate recession, if there’s such a factor. A few of you’ve got mentioned your organization
is already in a single.

We have to get the financial system a bit extra steady and get rates of interest again down
some. We simply heard a report that mentioned that used automobile costs are up 30% from
pre-pandemic ranges and that the typical automobile fee right this moment is over $700 a
month. That can certainly not go away many {dollars} for furnishings purchases. Excessive
mortgage charges are additionally hurting residence patrons together with the scarcity of
stock. The Convention Board initiatives that actual GDP will reply by simply
0.8% in 2024. With all of this, we might counsel that it might be some time earlier than
we see the furnishings enterprise again to extra “regular “ranges.

This Furnishings Insights® publication report has been re-published with
the permission of Smith Leonard PLLC an unbiased member of the BDO
Seidman Alliance.

Agency Profile: Based in 1930 by BDO Seidman, LLP, the Excessive Level, North
Carolina apply was lately acquired by 4 people who’ve spent
the vast majority of their 100+ yr careers constructing the prevailing apply.
Starting January 1, 2007, Smith Leonard PLLC grew to become an unbiased member
of the BDO Seidman Alliance. Companions are Ken Smith, Darlene Leonard, Jon
Glazman and Mark Bulmer. Among the many agency’s 32 workers are 18 CPAs.

Service Space – Smith Leonard concentrates primarily within the Triad, however
additionally providers firms with home places all through North Carolina,
Virginia, South Carolina and Texas.

Smith Leonard has an in depth community of worldwide relationships that
helps service their purchasers’ wants all through the world with places
in Asia, Europe, South America, Mexico and Canada. These firms vary in
income dimension of $2 million to $300 million.

Follow Focus – The vast majority of the consumer base consists
of producing and distribution firms.

A lot of its purchasers are both furnishings producers, distributors or
suppliers to the furnishings business. Smith Leonard additionally providers firms
in retail, transportation, insurance coverage, not-for-profit entities and worker
profit plans. Smith Leonard affords a full vary of accounting and
consulting providers together with audits, compilations, critiques, tax planning
and compliance. The companions and workers of Smith Leonard additionally assists purchasers
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The agency continues to provide month-to-month and annual statistics for the
furnishings business. For extra data name (336) 883-018 or
e-Mail: ksmith@smithleonardcpas.com.