Furniture Industry Triumphs
Leads U.S. Manufacturing Sector in New Orders Amid Overall Decline
Nationwide Southwest
Surge in Furniture Sector: A Beacon of Growth Amidst U.S. Manufacturing Downturn
Suddenly surging to the forefront, the furniture industry now tops the list of new orders in the U.S. manufacturing sector. This happens to be amidst the consistently declining growth rates across the overall manufacturing sector.
The May report by the Institute for Supply Management (ISM) indicates a 0.2% drop in the manufacturing sector from the previous month, landing it at 46.9%. This marks the sixth straight month of a shrinking sector, placing it at one of its lowest since May 2020, which stood at 43.1%.
As per ISM chairman, Timothy R. Fiore, the contraction in the manufacturing index is a clear sign of an increasing rate of decline in the sector. The readings for May suggest that companies are still adjusting outputs to align with demand and preparing for a potential growth phase towards the end of summer and early autumn. However, he acknowledges the prevailing business uncertainties.
New orders continued their downward trend, contributing to the concern over the return of growth in the manufacturing industry. Despite the lack of immediate growth and decline in demand, the ISM panelists displayed an equal measure of optimism for future growth. The anticipation of supply chains ready for growth, coupled with reducing lead times for significant purchases, is a positive. However, price volatility and unclear future demand as companies work through overdue deliveries and backlogs cast a shadow of uncertainty.
The furniture industry stands out against this backdrop. Out of the 18 manufacturing industries identified by the ISM, furniture was one of the four that reported growth. This represents a significant turnaround from last month, where the industry reported the largest contraction among all.
Only three industries reported an increase in new orders, and furniture led this group. This marked the first instance in over a year where the furniture industry reported a surge in new orders, while new orders in the overall sector fell for the ninth consecutive month.
Interestingly, the furniture industry saw no change in production output or employment. One industry insider even noted that despite a slight decrease in sales, they are maintaining a steady, albeit soft, pace.
Regarding supplier delivery speeds, the furniture industry reported no change, breaking its months-long streak of improvement. In contrast, the wood products industry was among the 13 reporting faster delivery speeds.
In terms of raw material prices, the furniture industry observed no change, while the wood products industry witnessed the most significant price drop. Finally, the volume of imports decreased in May across 11 industries, including furniture and wood products. Only two industries reported an increase in imports.