Inflation in the United States is gradually decreasing, the consumer price index is beginning to rise again, furniture inventory is decreasing, and the construction industry in this country is experiencing an increase in demand.
That is a general overview of the U.S. market in the last few months, and it is affecting the production processes of Vietnamese wood businesses. According to some units, orders have increased again, although not significantly, and the lead time for international buyers is relatively close, not as long as before. However, this is a positive recovery; Vietnamese manufacturers are ready to accept orders and maintain production.
Let’s examine some factors in the U.S. market, according to the latest Furniture Insights indices. From the beginning of the year until now, the number of new furniture orders is on par with the same period in 2022, at around 40%. A deeper report shows that the number of new orders up to the current time has decreased by 29% compared to 2022, increased by 29% compared to 2020, and according to Smith Leonard experts, shipments in October decreased by 17% compared to October 2022 but increased by 34% compared to September.
However, it is important to note that outstanding orders continued to decrease in October, down 51% from last year and also down from September, Furniture Insights notes, ‘Outstanding amounts may be higher than the amount of goods, once again due to prices. Increasingly due to mostly new outstanding goods, even when considering reduced shipping fees.’
“With annual and even monthly sales trends increasing by about 17 to 18%, the decline in receivables seems to exceed limits. However, U.S. furniture importers believe that as inventory levels gradually decrease, customer deposits also decrease. This will make the change in net receivables seem higher. As inventory levels return to normal, the results obtained will return to normal,” noted Mr. Smith.
On an adjusted basis, sales in October at furniture and home furnishings stores increased by 5.9% from September but decreased by 4.4% (unadjusted basis) year-to-date.
Mr. Smith commented that overall, civilian furniture business activities may be recovering moderately. While the overall economy seems to be growing at a robust pace in the third quarter, U.S. consumers are still spending, but rising living costs clearly impact furniture.
He added that leading economic indicators have been declining for over a year and a half. Nine out of ten component indices decreased or remained unchanged in October. The Conference Board predicts that these trends are expected to lead to a mild recession in the first half of 2024. If that is true, the business’s civilian sector may face more volatility as many believe that some parts, if not most, somewhat entered into a recession in 2023.
Meanwhile, Mr. Do Xuan Lap, Chairman of the Vietnam Timber and Forest Products Association, said that recently, wood industry businesses are asserting their proactiveness in integration business. When the market is declining, businesses are not passive but try to adapt. On the one hand, businesses reorganize their production machinery, streamline models to reduce costs. On the other hand, they make efforts to take advantage of support from trade promotion agencies to find new markets.
For the U.S. market, Vietnamese wood processing enterprises are actively staying close, thoroughly researching changes in the consumption habits of its people to have the best business promotion plans. This is reflected in the figures when the U.S. remains the main export market for Vietnamese wood products, accounting for 56.4% of the export value.
Moving from passive to proactive, in the long run, businesses will clearly see market trends, approach and obtain a more abundant customer base, moving towards expanding export markets,” affirmed Mr. Lap.
Source: goviet.org.vn
