Malaysian furniture manufacturing orders pick up
According to recent reports in the Malaysian media, this year, the order book of Malaysian furniture companies has slowed down significantly due to weak demand from U.S. customers and excess inventory. However, the recent slight recovery in the country's furniture industry, coupled with the strengthening of the US dollar, has led to improved quarterly financial results for some of these companies, with the North American market being a major source of profitability for many.
Analysts are generally optimistic about the gradual improvement in the furniture sector, but recognise that the long-term outlook remains uncertain given the likelihood of a further downturn in the global economy next year.
Thye May Ting, an analyst at PublicInvest Research, attributed the recent rise in furniture orders to low inventory levels in the US. The upcoming Christmas and Chinese New Year are expected to give a further boost to furniture order growth, which will likely keep the industry growing through the first half of 2024.
However, she said the current rebound in orders is relatively weak compared to the earnings surge from the order spike during the New Crown epidemic, when home office and isolation would have boosted furniture demand.
Thye said, "We expect near-term furniture sector earnings to be driven by the year-end holiday season and demand growth, while the real estate sector remains subdued in the near term due to high interest rates, so we do not anticipate a significant surge in overall furniture sector orders."
