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A business consultancy, based in London, England, John Sacks' JSA Consultancy Services provides expert, in-depth, information advice and guidance as to how to exploit successfully the office furniture and interiors markets in Europe, North America, Australasia and Japan.

Updated office furniture outlook predicts slow recovery

Tuesday 24 August 2010

The office furniture industry should see modest growth for the rest of 2010, resulting in flat sales for the entire year, followed by solid growth in 2011, according to an updated outlook.

Overall, the industry still faces a slow recovery from a severe 2009 downturn that pushed shipments down nearly 30 percent to their lowest level since 1992.
The updated outlook from the Grand Rapids-based BIFMA - Business and Institutional Furniture Manufacturer’s Association - in an upgrade from three months earlier, predicts a 0.5 percent decline in North American shipments for all of 2010, to $7.8 billion. BIFMA’s previous outlook in May forecast a 5.1 percent decline for 2010.

A better-than-expected second quarter, coupled with predicted 2 percent growth for the third and fourth quarters, led to the upgrade in the outlook for 2010, BIFMA Executive Director Tom Reardon said.

Second-quarter shipments, after declining 11% in the first quarter, grew 3.6% from April to June. The spring also saw a 13% increase in second-quarter orders over depressed rates of 2009, which should provide a solid base for increased shipments in the third quarter.

Inconsistency returned to incoming order rates during the summer, as uncertainty about the U.S. economy set in, Reardon said.

“All in all, we seem to be in the doldrums. Nobody knows what the economy is going to do,” he said.

Barring a double-dip recession, the new BIFMA outlook shows the industry should “continue to recover very slowly,” Reardon said.

BIFMA’s updated outlook, prepared by Global Insight, predicts a 6.7 percent increase in shipments for 2011, to $8.33 billion.

In West Michigan, Steelcase Inc. and Herman Miller Inc. both report their latest sales and earnings in September.

Brokerage analysts expect Grand Rapids-based Steelcase [NYSE: SCS] to report flat sales of $576.1 million and net income of 4 cents per share, followed by a 1.9 percent sales increase in the subsequent quarter, according to average estimates from Thomson Financial.

Average estimates have Zeeland-based Herman Miller [Nasdaq: MLHR] reporting a quarterly sales increase of 12.5 percent to $364.6 million and a 7.4 percent increase in the following quarter.

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