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BIFMA outlook shows industry lagging recovery

Thursday 3 September 2009

A new quarterly outlook reflects the US office furniture industry\'s typical lag of an economic recovery, even in what has been a far-from-typical downturn.
The Business and Institutional Furniture Manufacturer\'s Association outlook now projects shipments to decline 31 percent this year to $7.7 billion, followed by a 1 percent decline in 2010 to $7.6 billion.
The BIFMA outlook, prepared by Global Insight, presumes GDP growth returning for the U.S. economy in the third quarter. But the office furniture industry likely won\'t see volume growth return until mid-2010.
\"Unfortunately, furniture takes a while to catch up\" to an economic recovery, BIFMA Executive Director Tom Reardon said.
\"Furniture is not the first thing everybody runs out to buy when things seem like they may be moving up,\" Reardon said.
The new outlook represents a minor downgrade from the previous BIFMA forecast issued three months earlier.
If there\'s any good news in the outlook it\'s that the industry appears to have bottomed out, Reardon said. Third-quarter shipments should match the second quarter, as should the fourth.
\"It appears we may have found a bottom here and, hopefully, it will build and we can spring up from here,\" Reardon said.
Industrywide shipments in North America for the second quarter totaled $1.92 billion, down 32 percent from the $2.84 billion in the same period a year earlier, according to BIFMA. That came after a 27 percent shipment decline in the first quarter, to $1.91 billion from $2.65 billion.
In his latest U.S. economic briefing issued last week, Comerica Inc. chief economist Dana Johnson wrote that he continues to believe the economic rebound \"will be sluggish by historical standards.\" Real GDP will average 4 percent from mid-2009 to mid-2010, Johnson predicts -- or what he calls an \"unusually tepid upturn,\" though his outlook is double the consensus view.
Johnson forecasts that real GDP will reach 3.0 percent in the third quarter, followed by 2.5 percent in the fourth. Real GDP will grow to 4.5 percent in the first quarter, reach 5.5 percent in next year\'s second quarter, and then level off at 4.0 percent through the second half of 2010, Johnson predicts.
Unemployment nationally will peak at 9.9 percent in the fourth quarter, then steadily decline to 8.5 percent by the end of 2010, according to Johnson\'s outlook.
More on the office furniture industry\'s performance will come in a few weeks, when Steelcase Inc. and Herman Miller Inc. report sales and earnings for their latest quarters.

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