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US Office Furniture Orders, Shipments Tumble in January

Wednesday 4 March 2009

The US office furniture industry\'s downturn projected for 2009 is worsening and could exceed the worst of the volume declines experienced early this decade.

An updated outlook from the Business and Institutional Furniture Manufacturers Association sees industrywide shipments declining 19.3 percent this year to $9.0 billion, a one-year loss of more than $2 billion dollars in business.

The outlook, released this week, represents a significant downgrade from the 11.6 percent shipment decline previously forecast three months ago.

If it pans out, the 2009 decline will surpass the 19.0 percent drop-off in business experienced in 2002, the height of an unprecedented, three-year downturn for the office furniture industry that saw $4.7 billion in shipments disappear between 2001 and 2003, or a 35.9 percent volume decline.

The updated outlook comes as the nation\'s economy is stuck in recession, leading to reduced white-collar employment, capital spending, corporate profits and new office construction and occupancy rates -- all of which are key drivers for the industry.

The steep decline now forecast for 2009 comes after a 2.3 percent decline in 2008 that dropped shipments from $11.4 billion to $11.1 billion.

Tom ReardonDespite the nation\'s sluggish economy, shipments during much of the year were running flat. That changed when the financial and stock market meltdown hit in the fall, BIFMA Executive Director Tom Reardon said.

Shipments declined 6.7 percent alone in the fourth quarter, generating the overall 2.3 percent annual decline.

\"They were holding right in there,\" Reardon said.

Come October, \"things hit pretty hard\" and a contraction in business has continued ever since, leading officer furniture makers to quickly curtail production and cut jobs.

\"It\'s painful but obviously necessary,\" Reardon said of the action companies are making.

If there\'s any \"bright spot\" in the updated outlook, it\'s the comparatively small 1.1 percent decline forecast for 2010 and Global Insight\'s expectation that shipments will begin moving upward again in the latter half of 2010, Reardon said.

\"When you can see the light at the end of the tunnel, it is a little comforting,\" he said. \"It appears, at least, that right now, we can see the recovery.\"

Comerica Inc. senior economist Dana Jacobson, in a recent U.S. economic outlook, forecast Real GDP of negative 5.0 percent for the first quarter, then subsequent declines of 3.0 percent in the second quarter and 0.5 percent in the third.

Jacobson predicts Real GDP will recover to 3.0 percent growth in the fourth quarter, setting the stage for a rebound in the office furniture industry, which typically lags a recovery in the national economy.

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