Employment levels in the furniture industry have increased on balance by 8% - more than the 4% predicted in October 2017, according to the latest State of Trade survey from the British Furniture Manufacturers (BFM).

The rise, however, has come at a cost with many companies compelled to increase wages to attract the skilled workers they need. A balance percentage of 42% of those taking part in the survey said labour costs had increased over the past four months with 62% reporting rises ahead.

Results of the association's February report also show that the general view of the current business situation is mixed. Of those participating in the survey, 53% reported no change in trade since this time last year, 38% stated it was worse and 6% said it was better. Rising raw material costs also continues to be a major issue for the industry.

Said Mike Dimond, BFM director of employment and membership affairs: “Our trade survey has revealed a number of interesting findings, both positive and negative. While it’s encouraging to see a rise in employment figures within the sector, this comes at a cost and would support out annual wages survey last December when 75% of companies were suffering from skills shortages and 58% were forced to increase wages in some occupations.

“Unfortunately our latest survey also reveals that the optimism reported last October has proved to be short lived, with a pessimism about general business returning in this report. It showed that the least optimistic sector was upholstery (-50%) with the most positive being the bed industry (+7%).”  

 Main findings from the BFM's report were:

•    Orders and output: Volumes of order in-take and output were well below expectations and output was not predicted to improve in the next four months. The volume of output trend figure, although negative, was still better than in two of the previous four surveys.

•    Costs: Increasing raw material prices is still a major issue for the sector. While there are some signs that cost pressures are easing for particular materials, this doesn’t include foam, timber, board, plywood and fittings.

•    Factory gate prices: Faced with higher costs, many companies continue to increase product prices in levels not seen since 2010. Profit margins were last reported to be under such strain six years ago.

•    Export: 32% of those sampled exported products and the range varied between 3% and 40% of sales turnover. The median level was at its lowest for  eight years, at a disapointing 4%.  

71 companies responded to the BFM's State of Trade February survey (conducted three times a year). The State of Trade is an indicator of the current economic health of the furniture manufacturing sector and of future expectations for the trade. It looks at order intake, output volume, costs, product prices and profit margins. It also evaluates export performance and employment levels and examines trends through primarily “balance” percentages – that is the number of respondents that indicate an improvement less than those that indicate a worsening situation (or vice versa) divided by the total samples, including those that say there has been no change in the particular indicator since the last survey.