Consumer spending on furniture increased in volume at an annual rate of 2.1% in the fourth quarter of last year – up from 1.5% the previous quarter.

However, despite record retail sales overall growth in May this year, there is evidence of growing resistance to the purchase of discretionary items, from furniture and carpets, to mobile phones and personal computers. Meanwhile overseas suppliers are tightening their grip on the UK market as domestic output continues to slide.

Household expenditure on furniture in 2000 was 5.2% higher overall than in the previous year in volume terms. This compares with a growth in total household spending of 3.7% between 2000 and 1999. After allowing for price changes, the value of furniture purchases last year increased by 4.6% while total spending was up by 4.7%.

Indications of demand for furniture provided by the Confederation of British Industry suggest that annual volumes grew strongly during the first three months of 2001, with 58% of retail businesses reporting year-on-year gains in March. But thereafter growth started to falter, as annual sales grew among only 16% and 9% of businesses in April and May respectively. This contrasts with 32% and 35% of CBI survey respondents overall achieving yearly volume growth during the same months.

The British Retail Consortium notes that demand for electrical and electronic goods trailed off during May and the month was ‘generally disappointing’ for sales of cabinet furniture and upholstery. April had been described as ‘sluggish’ for big ticket furniture sales.

Changes in the retail price of furniture have been erratic since the beginning of the year. National Statistics reports an annual increase of 2.5% in March, followed by a rise of just 0.3% in April. Month-on-month price changes have ranged from a 3.6% increase in March to a 1.7% reduction in April.

At manufacturers’ factory gates, prices of kitchen furniture have been steady since January, at a level 1.6% higher than a year earlier. Bedroom, dining and living room furniture costs have been on a broadly downward trend since the beginning of 2001 and in April were 0.4% higher than 12 months before. Prices obtained for wooden-framed seats eased by 0.1%; wooden office furniture was 2.2% more expensive; and wooden shop furniture was up by 3.6% on the year.

Official estimates show that British manufacturers’ total output of kitchen furniture increased by 2.9% in the three months to April but was 3.9% lower than at the corresponding time a year earlier. Makers’ deliveries of other domestic furniture improved by 2.7% between the two latest three-month periods, but were down 0.2% on the same period in 2000.

The UK furniture industry’s performance in European markets has continued to weaken. In the fourth quarter of 2000 shipments to EC countries amounted to £32.7m, a drop of 17% compared with the same time in 1999. In 2000 as a whole, exports of wooden furniture to the EU during 2000 plummeted by 13%, to £142.6m. Sales of wooden office furniture fell by 4% on the year, while kitchen and bedroom furniture exports were down by 27% and by 15% respectively. Deliveries of other wooden furniture dropped by 10%.

In contrast, imports of wooden furniture from EC countries during the fourth quarter of 2000 soared to £91.3m, an increase of 26% over the same period in 1999. Overall, imports of wooden furniture from the EC last year grew by 16% compared with 1999. The value of wooden office furniture imports rose at a year-on-year rate of 25%, kitchen furniture by 5%, and bedroom furniture by 14%. Imports of other wooden furniture from the EC increased by 17%.

The picture of furniture trade with non-EU countries is almost as dismal. The value of UK exports grew by less than half of 1% between 1999 and 2000 but imports rocketed by 26%.

Looking ahead, the danger signs are that with inflation possibly rising, prospects for mortgage and interest rates have been re-evaluated and are now more likely to increase than to fall. If that takes the buoyancy out of the housing market the effect will rapidly lead to a cutback in spending on furniture.

Related Files
Retail prices
Retail sales
UK manufacturer’s prices