Author: Helen Thomas

November 12, 2014

Procrastinators and bargain hunters alike are taking their time getting started with their holiday shopping bonanza, possibly to take advantage of deeper discounts over Thanksgiving weekend and late in the season.  According to NRF’s Holiday Consumer Spending Survey, 45.6 percent of holiday shoppers say they haven’t started shopping yet, relatively flat with last years’ 46.2 percent but the lowest in the sruvey’s seven-year history.

“Many consumers are going to wait and see how great the promotions will be later this season before making any commitments,” said NRF President and CEO Matthew Shay.  “Retailers have reacted to this ‘wait and see’ mentality with fewer October deals and a much quieter entry into November, when we’ll start to see retailers ramp up with offers for exclusive merchandise, deep discounts and unique online savings opportunities.”

The survey found that while slightly fewer people haven’t started shopping yet, 20.6 percent have finished 10 percent or less of their shopping, while 12.4 percent have completed about one-quarter of their lists; 2.2 percent are saying they can sit back and relax as they have already finished their shopping for friends and family.

Unsurprisingly, apparel, toys and video games will be popular gift items this year.  The survey found six in 10 (60.9%) will buy clothing and accessories, 46.3 percent will buy books, CDs, DVDs and video games, and two in five (42%) will buy toys.  Likely having loaded up on wearable technology items and new smartphones throughtout the year, slightly fewer people will buy electronic items as gifts (30.7% vs. 33%).  Some people are in for a real treat: 24 percent of shoppers will buy jewelry for a friend or family member, the highest percent since 2006.  Gift cards continue as a favorite for both shoppers and recipients as six in 10 (60%) will buy gift cards, similar to the 59.2 percent who planned to do so last year.  In an October NRF survey, 60 percent of shoppers also said they’d like to receive gift cards, making gift cards the most requested gift item for eight years in a row.

Shoppers look for inspiration for gifts from every corner, and with the innovative creation of retailers’ wish lists, many consumers this holiday season will take to the web to point loved ones to specific, perfect gift ideas.  The survey found 32.1 percent say they will look for inspiration on wish lists, up from 28.8 percent last year.  Others will conduct online searches (47.7%), discuss options with family and friends (41.7%), check out advertising circulars (34.3%) and email advertisements (20.1%), and even search Facebook (10.6%).

“Retailers make holiday shoppers’ job easy with so many options to find the perfect gift, and with little room to waste on gifts that don’t make sense, consumers today want to be sure what they buy is used and enjoyed by their loved ones.  On the hunt for bargains, quality merchandise that is unique and even exclusive, gift givers this holiday season will seek out both practical and indulgent gift items, though being sure not to break the bank.”

When it comes to how shoppers will pay for their gifts, nearly four in 10 (38%) will use their credit card, the most in the survey’s history and up from 28.5 percent last year; one in five (21.6%) will use cash and 38.4 percent will use their debit or check card.  Just 2.1 percent will use a check, the lowest in the survey’s history.

When broken down by age group, young adults ages 18-24 are the least likely to use credit to pay for gifts at just 17.7 percent, and 65+ are the most likely to use credit cards at 56 percent.  Nearly half of 18-24 year olds (48.9%) plan to use their debit or check card to buy gift items.

Source: Retailing Today 

November 12, 2014

World economic growth, which stands at 3.2 percent for 2014, will accelerate modestly to 3.4 percent in 2015, The Conference Board reported today.

The Conference Board Global Economic Outlook provides output growth projections for 2015, 2015-2019, and 2020-2025, including 11 major regions and over 50 mature and emerging economies.  Overall, annual global growth is projected to average 3.3 percent from 2015-2019, but could decline to an average of 2.7 percent in the period 2020-2025 on the basis of the current trend.  According to the Outlook, long-term growth around 3 percent is sufficient to sustain a moderate increase in global living standards, but is too low to meet all the future challenges posed by rising middle classes in emerging markets and aging populations in mature economies.

“Growth in 2014 met our cautious projections, which were at the low end of analysts’ views,” said Bart van Ark, Chief Economist of The Conference Board.  “Optimists are poised to be similarly disappointed in 2015 – and more so as the long-term growth trend dips below 3 percent.  While many in both advanced and emerging economies continue to await a ‘full recovery’ to pre-crisis growth rates, we believe businesses and policymakers would stand better to focus on managing three key macroeconomic certainties that will define the slowdown in the decade ahead: First, a looming labor shortage; second, a drop in productivity growth; and finally, a lack of investment in productive assets.”

Recovery “Bonus” Shrinking for Mature Economies

Across the advanced economies, the Outlook predicts 2.3 percent growth in 2015, compared to 1.9 percent in 2014.  Growth in the Euro Area should improve to 1.6 percent from 0.9 percent in 2014; Europe as a whole is projected to grow 2.0 percent.  This modest spike in recovery is expected to last a few years and is apt to bring European growth somewhat higher – and closer to U.S. levels – than anticipated by the current consensus forecasts.  Beyond a brief period of upside potential, however, the long-term picture remains stagnant: The Outlook sees Euro Area growth averaging 1.9 percent across 2015-2019, before dipping back to 1.2 percent in 2020-2025.

Meanwhile, U.S. growth is expected to rise from 2.2 percent in 2014 to 2.6 percent in 2015.  This improvement reflects an economy steadily returning to full capacity – and will be difficult to sustain into the future as the risks of slower productivity growth sink in.  In the medium-term, the Outlook does expect the U.S. to sustain 2.4 percent annual growth during 2015-2019, but the long-term trend sees growth slowing to just 1.9 percent in 2020-2025.  In the same two periods, Japan is expected to grow at 1.4 percent and 1.1 percent, respectively.

“For much of this decade, forecasters have assumed that mature economies still face a large output gap between their actual production and their potential performance if operating at full capacity,” said van Ark.  “This offered a recovery ‘bonus’ that would allow advanced economies to make up what was lost in the recession at growth rates higher than the longer-term trend.  While the U.S., Europe, and others will still see some of these effects in 2015 and the following few years, we believe the output gaps have shrunk considerably and any post-recession ‘bonus growth’ will be relatively small and fleeting.”

Easy Growth Coming to and End in Emerging Economies – and the World

From the late 1990s until recently, emerging markets have powered the global economy, based on an unprecedented growth differential between emerging and advanced economies.  This historical anomaly is fading as many emerging economies are entering a phase in which rapid catch-up growth has come to an end, with the need for serious, long-term and politically problematic economic reforms coming to the fore.  In 2014, positive growth surprises in India and Mexico couldn’t offset major disappointments in Brazil and Russia, while China’s extended “soft fall” proceeded apace.

Overall, growth in developing and emerging economies is projected to inch down to 4.7 percent in 2015, compared to 4.8 percent in 2014 and 6.2 percent in 2010-2013.  The slowdown will be largely driven by the Chinese economy, for which growth is anticipated to decline further in 2015 to 6.5 percent, down from 7.3 percent in 2014.  Other large emerging markets will remain stagnant or see slight improvements in 2015, with growth projected at 5.5 percent in India; 4.3 percent in the rest of developing Asia; 1.8 percent in Latin America; and 3.4 percent in the Middle East and North Africa.  Sub-Saharan Africa will see solid growth improvement, from 4.2 to 5.0 percent, while growth will rebound to a still-anemic 1.4 percent in Russia, Central Asia, and Southeast Europe.

Looking further ahead, the medium trend in Chinese growth is projected to fall to an average of 5.5 percent in 2015-2019 and 3.9 percent in 2020-2025.  The corresponding numbers in India are 5.5 percent and 5.0 percent, meaning the Indian economy is likely to be growing significantly faster than China’s by the beginning of the next decade, making it a potential bright spot and strengthening contender in the global market.  Growth throughout 2015-25 should average 3.1 percent in Brazil and 2.8 percent in Mexico.  By the middle of the 2020s, emerging markets will still substantially outpace advanced economies – growing at an average 3.7 percent versus 1.8 percent – but by perhaps the smallest margin in a generation.

“While the growth contributions from emerging economies are by no means gone, and their growth will continue to be faster than that of mature economies, the significant downshift in their growth trajectories should make us aware that success from the recent past provides no guarantees for the future,” explained van Ark.  “For the year ahead in particular, the confluence of multiple geopolitical fissures in Eastern Europe, the Middle East, Western Asia, and (to a less urgent extent) the South China Sea make it even less likely that an emerging-market boom will ride to the rescue of global growth, as it has in the recent past.”

While the global picture appears downcast, it does offer opportunities for firms and governments with a realistic understanding of the challenges.  Ultimately, this decade of slower growth could offer a foundation for overcoming the risk of extended stagnation.

“At 3 percent global growth on average,” said van Ark, “the next ten years may come to look like the 1980s – a time of modest growth during which structural reforms in many economies facilitated the transition from the old post-World War II ‘golden years’ to an era driven by the rise of services and new innovations.”

Source: The Conference Board 

November 12, 2014

Macy’s third quarter sales were lower than expected but the company still managed to grow profits by 30% and expressed optimism regarding the fourth quarter.

The department store retailer said same store sales declined 0.7% while total sales declined 1.3% to slightly less than $6.2 billion during the third quarter ended November 1.  Net income increased 22.5% to $217 million while earnings per share, aided by the repurchase of nine million shares, increased 30% to 61 cents a share.

“We knew we were up against very strong third quarter sales growth for our company last year, and thus we had anticipated that our year-over-year comparison would be lower in the third quarter than in the fourth quarter.  Even so, sales did not live up to our expectations in the quarter,” Lundgren said.

Looking forward, the company said it expects same store sales to increase 2% to 3% in the fourth quarter, but also lowered its full year profit forecast to a range of $4.25 to $4.35 cents from a range of $4.40 to $4.50 cents.

Lundgren said he is optimistic about the fourth quarter for a variety of reasons, including strong digital capabilities.

“First we have developed an outstanding merchandise assortment for holiday gift-giving and self-purchase rooted in great style, exclusive offerings and outstanding value during this key shopping period,” Lundgren said.  “Second, we have enhanced our transition to fresh post-holiday vacation and resort assortments.  Third, we have new store, omnichannel and marketing strategies in place that we believe will drive incremental business throughout the fourth quarter.”

For example, Macy’s said its buy online pickup in store capability is now rolled out to full-line Macy’s and Bloomingdale’s locations and it has same day delivery pilots up and running in eight major Macy’s markets and four Bloomingdale’s markets.  The company said it also has improved functionality and usability in upgraded mobile apps.

Lundgren is also counting on the weather to lend a hand this holiday season.

“We are poised to capitalize on a return to more normalized weather patterns after the unusually severe snowstorms in the fourth quarter last year,” Lundgren said.

Source: Retailing Today

November 6, 2014

Builder confidence in the single-family housing market for the third quarter is up year over year, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today.  Compared to the third quarter of 2013, the single-family index jumped nine points to a level of 59, which is the highest third-quarter reading since the inception of the index in 2008 and the 12th consecutive quarter of year over year improvements.

“Demand for 55+ housing has never been higher, and this quarter’s index clearly demonstrates that,” said Steve Bomberger, chairman of NAHB’s 50+ Housing Council and president of Benchmark Builders Inc. in Wilmington, Delaware.  “Consumers in this market are looking for a home that caters towards their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs.”

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums.  Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).  An index number below 50 indicates that more builders view conditions as poor than good.

All components of the 55+ single-family HMI posted increased from a year ago: present sales jumped 13 points to 65, expected sales for the next six months climbed 10 points to 63 and traffic of prospective buyers rose three points to 46.

The 55+ multifamily condo HMI posted a four-point gain to a reading of 41, which is also the highest third-quarter reading since the inception of the index.  All components of the index increased for the third quarter: present sales rose five points to 42, expected sales for the next six months climbed three points to 43 and traffic of prospective buyers increased three points to 38.

The indices tracking production and demand of 55+ multifamily rentals also posted positive results in the third quarter.  Present production rose four points to 52, expected future production increased two points to 52, current demand for existing units climbed four points to 64 and future demand increased five points to 65.

“The consistent rise in home equity has contributed to the strong gains in the 55+ housing market,” said NAHB Chief Economist David Crowe.  “Many consumers who had been sidelined due to the inability to sell their current homes at an acceptable price are now in a position where they can sell their homes, enabling them to rent or buy in a 55+ community.”

Source: National Association of Home Builders

November 10, 2014

The Conference Board Employment Trends Index (ETI) increased in October.  The index now stands at 123.09, up from 121.91 (an upward revision) in September.  This represents a 7.7 percent gain in the ETI compared to a year ago.

“The Employment Trends Index continues to increase rapidly, with all eight components improving in October,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board.  “The index is signaling solid job growth through the winter.  As a result, we could see the unemployment rate reach its natural rate of 5.5 percent by early Spring.”

October’s increase in the ETI was driven by positive contributions from all eight components.  In order from the largest positive contributor to the smallest, these were: Percentage of Firms With Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Ratio of Involuntarily Part-time to All Part-time Workers, Number of Temporary Employees, Industrial Production, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Real Manufacturing and Trade Sales, and Job Openings.

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area.  Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index include:

• Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey)
• Initial Claims for Unemployment Insurance (U.S. Department of Labor)
• Percentage of Firms With Positions Not Able to Fill Right Now (National Federation of Independent Business Research Foundation)
• Number of Employees Hired by the Temporary Help Industry (U.S. Bureau of Labor Statistics)
• Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
• Job Openings (BLS)
• Industrial Production (Federal Reserve Board)
• Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

Source:The Conference Board

November 7, 2014

The labor market remains resiliently strong, as evidenced by the gain of 214,000 new jobs created in October, close to the average monthly change of 220,000 in the past year.  The combination of strong job growth and only moderate GDP growth suggests that the trend of weak improvement in labor productivity is likely to continue.  The continued drop in the unemployment rate, to 5.8 percent in October, increases the odds that both reaching the natural rate of unemployment and the first Fed rate hike would occur in the first half of 2015.  The decline in the unemployment rate in October occurred for good reasons – strong employment growth and a decline in the number of unemployed – and not due to further departures from the labor force.  However, it remains concerning that despite the tightening of the labor market, the establishment survey has yet to show much acceleration in wage growth.

Source: The Conference Board

November 7, 2014

According to the National Retail Federation, retail industry employment increased by 22,100 jobs in October.  Employment gains were broad and consistent in most retail categories, especially in general merchandise stores, which saw an increase of 11,900 jobs.  NRF figures do not include automobile dealerships, gasoline stations or restaurants.

“Today’s solid employment report is an indication that the economy is on firmer turf heading into the all-important holiday shopping season,” NRF Chief Economist Jack Kleinhenz said.  “Retail employment growth was broad based with marked increases in a cross section of categories and positions.”

“With the labor market steadily improving and hiring increasing, we should witness a corresponding lift in business activity and consumer spending,” Kleinhenz said.  “The economy is progressing toward sustainable growth with employment gains key to improved confidence and self-reinforcing economic growth.”

NRF forecasts that retailers and merchants will hire between 730,000 and 790,000 seasonal workers this holiday season.

Source: National Retail Federation

November 6, 2014

Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter of 2014, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today.

This represents a year-over-year net gain of seven markets.  The index’s nationwide score moved up slightly from .89 in the second quarter to .90, meaning that based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity.  Meanwhile, 66 percent of markets have shown an improvement year-over-year.

“The markets are recovering at a slow, gradual pace,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  “Continued job creation, economic growth and increasing consumer confidence should help spur pent-up demand for housing.”

Baton Rouge, Louisiana, continues to top the list of major metros on the LMI, with a score of 1.39 – or 39 percent better than its last normal market level.  Other major metros leading the list include Austin, Texas; Honolulu; Oklahoma City and Houston.  Rounding out the top 10 are Los Angeles; San Jose, California; Salt Lake City; New Orleans and Charleston, South Carolina – all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.

“An uptick in the number of single-family permits, which is currently only 44 percent of normal activity, is the key to a full-fledged housing recovery,” said NAHB Chief Economist David Crowe.  “In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered.”

“Nearly half of all the markets on the Leading Markets Index are up since August, which is a good sign that the ongoing housing recovery will keep moving forward in 2015,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.

Looking at smaller metros, both Midland and Odessa, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession.  Also leading the list of smaller metros are Grand Forks, North Dakota; Bismarck, North Dakota; and Casper, Wyoming, respectively.

Source: National Association of Home Builders

November 5, 2014

Walgreens reported October sales of $6.8 billion, an increase of 6.9% from the comparable year-ago period.

Prescriptions filled at comparable stores increased by 3.6% in October and increased 4.1% on a calendar day-shift adjusted basis, meeting analyst expectations.  “Script growth for the chain drug stores likely grew in the low-to-mid-single-digit range again in October, but appears to have slowed vs. September,” Ed Kelly, Credit Suisse research analyst, commented in a note last week.  “Average script growth through the first three weeks of October, as reported by IMS, grew approximately 3.2% on a year-over-year basis, below the (approximate) 3.9% level seen in September,” he said.  “Flu activity is modestly higher than it was at this time last year and may provide a modest tailwind to comps.”

Flu shots administered at Walgreens’ pharmacies and clinics season to date were more than 5.7 million versus approximately 4.9 million last year.

October pharmacy sales increased by 9.9%.  Comparable store pharmacy sales increased 7.5% and increased by a calendar day-shift adjusted 8%.  Calendar day-shift adjusted comparable store pharmacy sales were negatively impacted by 190 basis points due to generic drug introductions in the last 12 months, and were positively impacted by 40 basis points due to more flu shots versus last year.  Pharmacy sales accounted for 67.3% of total sales for the month.

Total front-end sales increased 2.7% in October compared with the same month in fiscal 2014, while comparable store front-end sales increased 2%.  Customer traffic in comparable stores decreased 1.9% while basket size increased 3.9%.

Sales in comparable stores increased by 5.6% in October.  Calendar day shifts negatively impacted total comparable sales by 30 basis points, while more flu shots versus last year positively impacted total comparable sales by 30 basis points.  Generic drug introductions in the last 12 months negatively impacted total comparable sales by 130 basis points.

Calendar 2014 year-to-date sales for the first 10 months were $64.2 billion, an increase of 6.1%.  Fiscal 2015 year-to-date sales for the first two months were $13.2 billion, up 7.7%.

Walgreens opened 16 stores during October, including relocations, and closed one.

Source: Retailing Today

November 5, 2014

• Online labor demand continues on a slow growth trend in 2014
• Most states and MSAs showed small gains in October

Online advertised vacancies rose 11,700 to 5,083,600 in October, according to The Conference Board Help Wanted OnLine (HWOL) Data Series, released today.  The September Supply/Demand rate stands at 1.83 unemployed for each advertised vacancy, with a total of 4.2 million more unemployed workers than the number of advertised vacancies.  The number of unemployed was 9.3 million in September.

“U.S. labor demand continues on a steady, slow growth trend, maintaining historically high demand levels with over 5 million ads each month,” said Gad Levanon, Director of Macroeconomics and Labor Markets at The Conference Board.  “The data continue to indicate a strong U.S. labor market.”

In October, the Services/Production occupational category saw a gain, while the Professional category saw a small loss.  Sales (22,100) and Transportation (23,800) bounced back from large September losses with most other occupational categories showing just small increases/decreases.

Regional and State Highlights

• Fifteen of the 20 largest states posted small gains in October
• Among the 50 states, 31 experienced gains and 16 declined while 3 (Mississippi, Oklahoma, and Montana) remained constant

October Changes for States

In October, online labor demand was up in 31 states, down in 16, and unchanged in 3.  All four regions experienced increases.

Metro Area Highlights

• In October, among the 20 largest metro areas, 15 gained advertisements, 4 lost, and 1 (Boston) remained constant
• Of the 52 metro areas for which Help Wanted OnLine provides monthly data, 36 gained advertisements, 12 lost, and 4 (Boston, Buffalo, Providence, and Indianapolis) remained constant

Metro Area Changes

In October, out of the largest 52 metro areas, online labor demand was up in 36 metro areas and down in 12 while 4 remained constant.  The MSAs with the largest gains in each of the regions were: New York (+11,900) in the Northeast; Seattle-Tacoma (+3,700) and San Francisco (+2,400) in the West; Dallas (+3,300) in the South; and Detroit (+1,600) in the Midwest.

Occupational Highlights

• In October, of the 10 largest online job categories, 7 posted gains and 3 posted declines

Occupational Changes for the Month of October

The largest gain in October was in Transportation ads, which increased 23,800 in October to 336,800 as demand for heavy and tractor-trailer truck drivers increased.  October’s gain offsets the September loss of 22,900.  Sales ads increased 22,100 to 608,400 largely due to a rise in demand for retail salespeople.  This gain mostly offsets the September loss of 32,500.

Source: The Conference Board