In the first quarter of 2023, the German upholstered furniture industry achieved sales revenue of approximately EUR 305 million, of which the revenue in March was EUR 116 million, according to the Association of the German Furniture Industry (VDM). Currently, exports make up 32.3% of the country’s total upholstered furniture market and the share of domestic sales is 67.7%. In March 2023, new orders for German upholstered furniture decreased 10.62% year-on-year, of which new orders generated domestically decreased by 11.2%, and those generated overseas decreased by 8.75%, indicating a decline in both domestic and foreign demand. Moreover, German’s upholstered furniture exports decreased by 6.19% year-on-year in the first quarter. The main export destinations were Switzerland, Austria, France, and the Netherlands. The most important export destination outside Europe was still the U.S., while exports to Poland experienced the largest decline (-20.2% yoy). During this period, the German upholstered furniture import shrank 21.02%. The top 5 import sources were Poland, China, Hungary, Romania, and Turkey. It is worth noting that China won the title of “the largest furniture import source for Germany” in 2022, but in the first quarter of 2023, the import volume of upholstered furniture from China to Germany slumped by 50.2%!

Data from the Federal Statistical Office showed that Germany’s GDP contracted by 0.3% year-on-year in the first quarter of 2023. This follows a 0.5% contraction in the last three months of 2022, resulting in consecutive quarters of declining GDP, meaning that Germany has slipped into a “technical recession”. The persistence of high price increases continued to be a burden on the German economy. This was particularly reflected in household final consumption expenditure, which was down 1.2% in the first quarter of 2023. And consumers reduced spending on various categories such as food & beverages, clothing & footwear, and furnishings. Government spending also saw a significant decline of 4.9%. Compared with other advanced economies, Germany is losing momentum for growth.

Figure 1 Ifo Business Climate Index for the German Upholstered Furniture Industry, Jan-May 2023

Data Source: VDM

The Ifo Business Climate Index fell to 91.7 points in May, after 93.4 points (seasonally adjusted) in April, according to the Ifo Institute. This marks the first decline after six increases in a row. The Ifo Business Climate Index is seen as an indicator for economic development in Germany. Economists predict that the German economy may stagnate in the upcoming summer. In terms of the German upholstered furniture market, after a short rebound in February, a downtrend emerged again and continued from January to May 2023. Meanwhile, the overall business situation has kept weakening in 2023. However, expectations turned positive in May. Employees in the German upholstered furniture industry increased from 4,145 at the end of 2022 to 4,710 in March 2023, a year-on-year increase of 12.9%, reflecting a moderate recovery in upholstered furniture production. Overall, although the German upholstered furniture market is likely to further grow in the future, but there are still many uncertainties in its growth as the overall economic situation is unfavorable.