To gauge the outlook for furniture sales, check the real estate market. When people change homes, they often spend to furnish their new digs. And when they stay put, they tend to put off buying that new sofa or dresser.
Since the housing bubble began deflating, furniture imports have been sluggish. Last year, U.S. furniture import totaled 1,662,586 20-foot equivalent units, down 15,997 TEUs from 2010, according to PIERS, a sister company of The Journal of Commerce. Last year’s total represented declines of 5.4 percent from 2008 and 6.3 percent from the 2007 peak of nearly 1.9 million TEUs.
Furniture imports rose 1.9 percent to 421,835 TEUs in the first quarter of this year. It was the second consecutive quarterly increase, but Journal of Commerce Economist Mario O. Moreno warned the recovery remains fragile and requires increased employment. The momentum may not last for too long if recovery in labor markets falters,” he wrote in the May issue of JOC Insights.
Furniture and home furnishings are the highest-volume commodity category for U.S. containerized imports, accounting for about 10 percent of total volume. Furniture importers include big-box retailers such as Wal-Mart, Target and IKEA, as well as department stores and specialized retailers such as Furniture Brands International.
The sector is especially important in the trans-Pacific trade lane. China accounted for 68.7 percent of containerized furniture imports last year, compared with 69.3 percent in 2010.
China, however, is in no danger of being supplanted as the top source of furniture imports. Vietnam increased its share of containerized imports to 10.7 percent from 10.3 percent in 2010, but it lacks the production scale to match China.
China’s rise to dominance in furniture manufacturing was sudden, following the nation’s accession to the World Trade Organization in 2002. China surpassed Italy in 2004 as the top furniture exporter, according to the U.N. Conference on Trade and Development.
Last year, China accounted for 48.7 percent of U.S. furniture imports measured by value, according to International Trade Commission estimates. The value of Chinese furniture imports to the U.S. held steady at $7.2 billion, while the value of imports from other countries rose 2.3 percent.
Recent housing data provide support for at least mild optimism about trends in furniture sales and imports this year, although household formation rates remain the lowest in years. A Pew Research Center survey found more than one in five adults between ages of 25 and 34 live with their parents or in other “multigenerational” living arrangements, the highest level since the 1950s.
The National Association of Home Builders forecasts new-home sales will rise from a record low 305,000 units in 2011 to 357,000 this year and 505,000 in 2013. Sales of existing single-family homes are expected to rise from 3.8 million last year to 4.4 million in 2012 and 5.4 million next year.
“The economy is in an uneven recovery, and we can expect some corresponding ups and downs in the housing market in the months ahead,” said David Crowe, chief economist at the National Association of Home Builders. “However, NAHB believes that on the whole, we can expect a slow and gradual recovery in housing starts, home sales and the overall housing market in 2012.”