The German furniture industry has felt the impact of consumer restraint in the first half of 2024 but is hopeful for a slight seasonal increase in furniture demand in the coming months.
"We believe the industry has passed the lowest point," said Jan Kurth, Managing Director of the German Furniture Industry Associations, during the annual economic press conference in Cologne. Early cautious indicators suggest an improvement in consumer sentiment so far this year. Additionally, the business climate in the furniture industry, as measured by the Ifo Institute, slightly improved in August. Optimism is also fuelled by the fact that many Germans are experiencing rising real wages due to a slowdown in inflation and recent wage increases.
Moreover, as fall approaches, home furnishing traditionally becomes more of a focus, replacing the summer's dominant theme of travel. However, the expected boost is unlikely to fully offset the revenue losses recorded in the first half of the year. "Against this backdrop, we expect a full-year revenue decline of 7 to 9 percent for 2024," Kurth predicted.
In the first half of this year, the German furniture industry's revenue decreased by 9.7 percent to 8.3 billion euros, according to official statistics. On the domestic market, the 417 companies (with more than 50 employees) with a total of 71,841 employees generated around 5.6 billion euros in revenue, down 9.1 percent from the same period last year. Foreign revenue declined even more sharply, by 10.9 percent, to 2.7 billion euros. The export share was about one-third.
All segments of the industry experienced declines. The kitchen furniture sector recorded revenues of around 2.9 billion euros, a decrease of 9.8 percent. Upholstered furniture manufacturers saw a revenue decline of 11.2 percent, to around 500 million euros. The largest decline was in the "other furniture" category (including living room, dining room, and bedroom furniture as well as furniture parts), where revenue fell by 15 percent to 2.5 billion euros. The smallest segment of the industry—the mattress industry—reported a slight revenue decline of 1.3 percent, to just under 270 million euros.
The investment goods segments of the furniture industry also experienced a downward trend. The office furniture industry generated revenues of around 1.1 billion euros (down 1.8 percent), while manufacturers of shop and other commercial furniture reported revenues of around 980 million euros, down 3.7 percent from the previous year.
Most European markets saw declines in the first half of the year. Exports to France, the most important export market, fell by 8.7 percent to just under 660 million euros. Deliveries to Switzerland (down 8.3 percent), Austria (down 13 percent), the Netherlands (down 11.3 percent), the United Kingdom (down 4.2 percent), and Belgium (down 8.9 percent) also weakened. Furniture exports to the United States, by far the most important market outside Europe for "Made in Germany" furniture, remained roughly at last year's level, at just under 130 million euros. Thanks to joint trade fair activities, kitchen furniture sales in the U.S. increased by 5.2 percent. Exports to China grew by 6.4 percent to around 76 million euros, making China the second most important non-European export market for German furniture.
"The reasons for consumers' reluctance to buy in recent months include rising energy and food prices as well as political uncertainty due to the state of the coalition government," said Kurth, Managing Director of the association. "We know that economics is also about psychology, and what the government is currently projecting is contributing to citizens' uncertainty and frustration. Many have lost faith that this government can still seriously solve problems and break free from the paralysing conflict mode ahead of the next federal election."
This sentiment is echoed in the furniture industry: In a recent association survey, companies cited the weak consumer climate as their biggest challenge by far. This is followed by economic policy stagnation in Germany, excessive bureaucracy, a shortage of skilled workers, and rising wages, salaries, and energy costs. The sluggish new housing construction also poses significant concerns. According to the latest association survey, 38 percent of the companies surveyed applied for short-time work in August. Around 40 percent of manufacturers plan to implement short-time work in the fourth quarter.
More information:
Verbände der deutschen Möbelindustrie (VDM/VHK)
www.moebelindustrie.de