U.S. office furniture orders, shipments fall in December

Tuesday 3 February 2009

U.S. office furniture shipments fell 12 percent to $900 million in December, its worst drop since April 2003, a trade group said on Tuesday.

The Business and Institutional Furniture Manufacturers Association (BIFMA) said monthly orders also fell 17 percent to $710 million.

The trade group said the latest data suggested that absolute demand declined further in December as the month\'s orders and shipments faced easier prior-year comparisons compared to November.

BIFMA compiled its latest report from 38 companies that account for more than 76 percent of the industry\'s volumes.

Historically, business confidence, corporate profits, white-collar employment and office vacancy rates have been the primary drivers of the industry, Raymond James analyst Budd Bugatch said in a note to clients.

But business confidence and service-sector employment are at recessionary levels, and office vacancy rates have begun to climb, he said, adding that he is cautious about the outlook for office furniture companies.

\"While new office construction has held up very well, growth continues to decelerate and we expect conditions to become increasingly challenged through the balance of 2009 ...,\" he said.

Bugatch said given the long lead times between planning and completion of major projects and the tightening credit conditions, he expects office furniture orders and shipments to decline by 13.1 percent and 11.6 percent, respectively, in 2009.

The analyst reaffirmed his \"outperform\" rating on Herman Miller Inc (MLHR.O) and Knoll Inc (KNL.N) and his \"market perform\" rating on Steelcase Inc (SCS.N) and HNI Corp (HNI.N).