Author: Helen Thomas

June 24, 2014

Sales of newly built, single-family homes rose 18.6 percent to a seasonally adjusted annual rate of 504,000 units in May, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  This is the highest rate since May 2008.

“These numbers are in line with our recent builder surveys, which indicate that more consumers are getting off the fence and coming back into the marketplace,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

“This increase is a welcome sign after a slow start to 2014,” said NAHB Chief Economist David Crowe.  “As job creation continues, we can expect further release of pent-up demand and continued gradual growth in the housing recovery.”

Regionally, new home sales were up across the board.  Sales rose 54.5 percent in the Northeast, 34 percent in the West, 14.2 percent in the South and 1.4 percent in the Midwest.

The inventory of new homes for sale held steady at 189,000 units in May.  This is a 4.5 month supply at the current sales pace.

Source: National Association of Home Builders

June 24, 2014

Index at Highest Level Since January 2008

The Conference Board Consumer Confidence Index, which had increased in May, improved again in June.  The Index now stands at 85.2, up from 82.2 in May.  The Present Situation Index increased to 85.1 from 80.3, while the Expectations Index rose to 85.2 from 83.5 in May.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence continues to advance and the index is now at its highest level since January 2008 (87.3).  June’s increase was driven primarily by improving current conditions, particularly consumers’ assessment of business conditions.  Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed.  Still, the momentum going forward remains quite positive.”

Consumers’ appraisal of current conditions improved in June.  Those claiming business conditions are “good” increased to 23.0 percent from 21.1 percent, while those stating business conditions are “bad” decreased to 22.8 percent from 24.6 percent.  Consumers’ assessment of the job market was also more favorable.  Those stating jobs are “plentiful” edged up to 14.7 percent from 14.2 percent, while those claiming jobs are “hard to get” declined to 31.8 percent from 32.2 percent.

Consumers’ expectations were generally more positive in June.  The percentage of consumers expecting business conditions to improve over the next six months increased to 18.8 percent from 17.7 percent.  However, those expecting business conditions to worsen increased to 11.4 percent from 10.7 percent.

Consumers were more positive about the outlook for the labor market.  Those anticipating more jobs in the months ahead increased to 16.3 percent from 15.2 percent, while those anticipating fewer jobs edged down to 18.7 percent from 18.9 percent.  Fewer consumers expect their incomes to grow, 15.9 percent versus 18.0 percent, but those expecting a drop in their incomes also declined, to 12.1 percent from 14.5 percent.

Source: The Conference Board

June 19, 2014

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in May to 101.7, following a 0.3 percent increase in April, and a 1.0 percent increase in March.

“May’s increase in the LEI, the fourth consecutive one, was broad based,” said Ataman Ozyildirim, Economist at The Conference Board.  “Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year.”

“Recent data suggest the economy is finally moving up from a 2 percent growth trend to a more robust expansion,” said Ken Goldstein, Economist at The Conference Board.  “The CEI shows the pace of economic activity continued to gain traction in May, while the trend in the LEI remains positive.  Going forward, the biggest challenge is to sustain the rise in income growth which will drive consumption.”

The Conference Board Coincident Economic Index (CEI) for the U.S. increased 0.3 percent in May to 109.0, following a 0.2 percent increase in April, and a 0.4 percent increase in March.

The Conference Board Lagging Economic Index (LAG) for the U.S. increased 0.4 percent in May to 123.8, following a 0.3 percent increase in April, and a 0.6 percent increase in March.

June 18, 2014

The National Retail Federation (NRF) had forecast that Father’s Day spending would shrink this year, reaching just $12.5 billion.  But it looks like the smallest of gift-giving holidays fared better than expected.

Overall U.S. retail online sales for the week leading up to Father’s Day – June 9-15 – climbed more than 14% compared to the same period last year.

Some of the key drivers were mobile traffic, which accounted for more than 38% of all online traffic, up more than 26% compared to the same period last year.  Mobile sales saw strong growth as well, up more than 37%, reaching nearly 19% of all online sales.

Smartphones drove 24.8% of all online traffic compared to tablets at 12.85, making it the browsing device of choice.  When it came to making the sale, tablets drove 12.2% of all online sales while smartphones accounted for nearly half of that at 6.4%.  Tablet users also averaged $106.71 per order, versus smartphone users, who averaged $89.55 per order.

As a percentage of total online sales, iOS was almost four and a half times higher than Android, driving 15.2% versus 3.4% for Android.  On average, iOS users spent $103.85 per order compared to $73.08 for Android users, a difference of 42%.  iOS also led as a component of overall traffic with 25.6% versus 12.3% for Android.

Shoppers referred from Facebook averaged $99.43 per order, versus Pinterest referrals, which drove $142.75 per order.  However, Facebook referrals converted sales at a rate more than four times that of Pinterest referrals.

Supporting these overall trends, real-time trends across three of the most popular retail categories for Father’s Day purchases were reported:

• Department stores: Father’s Day total online sales grew by 30.5% over the same period last year, with mobile sales growing by 29% year over year.
• Home goods: Father’s Day total online sales grew by 21.4% over the same period last year, with mobile sales growing by 25% year over year.
• Apparel: Father’s Day total online sales grew by 13.5% over the same period last year, with mobile sales growing by more than 42% year over year.

Source: Retailing Today

June 18, 2014

Americans have the highest job satisfaction levels since the beginning of the Great Recession, according to a report released today by The Conference Board.  The majority, however, continue to be unhappy at work.

The report, based on a Fall 2013 survey of 5,000 U.S. households conducted for The Conference Board by The Nielsen Company, finds 47.7 percent of Americans are satisfied with their jobs.  Though a slight improvement from 2012 and 2010 – when the figure stood at 47.3 and 42.6 percent (an all-time low), respectively – job satisfaction remains historically low, extending a trend seen since the turn of the century.  While job satisfaction in the 1980s and ’90s routinely neared 60 percent or higher, 2005 was the last year in which a majority of Americans was satisfied at work (52.1 percent).

“The U.S. economy is growing at a disappointing rate, and this sluggish recovery is mirrored in American workers’ tepid job satisfaction,” said Rebecca Ray, Executive Vice President, Knowledge Organization at The Conference Board and a co-author of the report.  “That said, as the direct effects of the recession wear off, workers are also seizing new opportunities in a tightening labor market – a fact reflected in rising quit rates.  Employers able to improve job satisfaction could thus gain a significant competitive advantage in attracting and retaining capable employees.”

Identifying the Key Drivers of (Dis)satisfaction

The survey broke down satisfaction to its component elements.  Respondents were asked their level of satisfaction on different aspects of their jobs – and which aspects were most important to them.

• Despite stalled overall satisfaction and downward historical trend, satisfaction in some areas – notable, compensation, recognition, and career development – are near ten-year highs.
• In general, employees are most satisfied with their work environment and related elements: colleagues, interest in work, commute to work, physical environment, and supervisor are all rated highly.
• Workers are least satisfied with promotion policy, bonus plan, training programs, performance review, and recognition.
• In terms of importance, communication channels, interest in work, recognition, and workload are ranked as most critical to overall satisfaction.  Low priority is given to commute to work, health plan, retirement plan, sick day policy, and vacation policy.
• Employers would be wise to concentrate on those components considered highly important with low current levels of satisfaction.  These include growth potential, communication channels, recognition, performance review, and wages.
• Of all components, only pension/retirement, job security, workload, and commute to work remain below 2008 satisfaction levels.

“Based on macro trends – including a significantly tighter labor market, slowing productivity growth, and more business investment – worker satisfaction should be on the rise,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report.  “But job dissatisfaction may remain entrenched until we see improvements in worker compensation, which has grown abysmally in recent years despite historically high corporate profits.”

The Rich Keep Getting (Relatively) Happier – and Other Demographic Trends

As in previous editions of the survey, significant disparities were found across various populations.  Among the key findings:

• High-income earners are more satisfied than lower-paid workers – and the gap has been widening in recent years.  The survey found 64.1 percent satisfaction among those making $125,000 and over.  At 57.6 percent, workers making $75,000 to $100,000 are also significantly more satisfied than two years ago.  Meanwhile, just 24.4 percent of those making under $15,000 and 32.0 percent making between $15,000 and $25,000 are satisfied.
• Men and women have broadly similar satisfaction levels, but diverge sharply in their priorities.  Men place higher importance on compensation and interest in their work, while women value flexibility, workload, advancement, and people at work.
• Workers aged 25 to 34 are the most satisfied, at 50.5 percent.  Workers over 65 are also relatively satisfied (49.4 percent), suggesting those delaying retirement are reasonably content with working later in life.  At 37.8 percent, satisfaction is lowest among workers under 25 – down significantly from the 2012 survey.
• Only 44.0 percent of workers are satisfied in the East South Central region – Alabama, Kentucky, Mississippi, and Tennessee – the lowest in the nation.  At 54.3 percent satisfaction, New Englanders are the most satisfied workers.

Source: The Conference Board

June 17, 2014

Declines in both single and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  However, single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

“The dip in single-family production shows builders continue to move carefully in adding inventory,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  “They are also facing supply chain issues, such as access to lots and labor.”

Single-family housing starts were down 5.9 percent to a seasonally adjusted annual rate of 625,000 units in May.  Meanwhile, multifamily production fell 7.6 percent to a seasonally adjusted annual rate of 376,000 units.

“The encouraging news is that single-family permits are up by almost 4 percent,” said NAHB Chief Economist David Crowe.  “The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market.  We are still forecasting a 12 percent increase in total housing starts for the year.”

Regionally in May, combined single and multifamily housing production fell in the Northeast, the Midwest and the West, with respective losses of 25.2 percent, 16.5 percent and 16.3 percent.  Meanwhile, the South posted a 7.3 percent gain.

Issuance of building permits registered a 6.4 percent decline to a seasonally adjusted annual rate of 991,000 units in May.  This was due entirely to a decrease in the multifamily sector, where permits registered a 19.5 percent loss to 372,000 units.  Single-family permits increased to 619,000 units.

The Northeast and Midwest registered overall permit gains of 3.5 percent and 3.8 percent, respectively, while the South and West posted respective losses of 7.3 percent and 15.2 percent.

Source: National Association of Home Builders

June 16, 2014

Builder confidence in the market for newly built, single-family homes rose four points in June to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.  It remains one point shy of the threshold for what is considered good building conditions.

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  “However, builders are facing strong headwinds, including the limited availability of labor.”

“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe.  “Builders are reacting accordingly, and are moving cautiously in adding inventory.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”  The survey also asks builders to rate traffic of prospective buyers as “high to very high,” average” or “low to very low.”  Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three index components posted gains in June.  Most notable, the component gauging current sales conditions increased six points to 54.  The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47.  The Midwest fell a single point to 46.

Source: National Association of Home Builders

June 6, 2014

Sears Hometown and Outlet Stores CEO and president Bruce Johnson cited weather and promotions as factors affecting the retailer’s first quarter results.

Net sales in the quarter decreased 1.9% to $589.9 million from $601.1 million in the first quarter of 2013, driven primarily by a 6.2% decrease in same-store sales.  Lower initial franchise revenues and lower liquidation revenues on end-of-season mark-out apparel merchandise received from Sears Holdings also negatively impacted net sales.

“First quarter results were affected by three main factors: weather,” said Johnson.  “For the second year in a row, lawn and garden sales were negatively impacted by an unseasonably cold spring in many of our trade areas that dampened sales in March and April, following a very cold February that reduced overall store traffic and sales; continued lower margins in Outlet due to insufficient quantities of higher-margin, ‘as-is’ appliances; and a heavily promotional appliance retail environment where appliance retailers layered free delivery on top of discounted pricing.”

Repeat visits decreased 1% year-over-year but bounced back from a low in April.  Analysis indicates this rebound is another positive sign for sales.  The best day of the month was Thursday, May 29, with outperformance across all metrics.  The worst day of the month was Sunday, May 4, which saw significant underperformance in traffic.  In addition, fewer than expected repeat shoppers were seen on this day.

Source: Retailing Today

June 5, 2014

Although comparable-store sales at Fred’s declined slightly in May, the company said sales strengthened in the last week of the month thanks to the first ad in its new marketing and branding program, designed to increase traffic and heighten customer awareness of category diversity.

The company’s total sales for the month stayed flat at $151.9 million, compared with $152.3 million in May last year.  Comparable-store sales for the month declined 0.4% compared with a 0.5% decrease in the same period last year.

Fred’s total sales for the first four months of fiscal 2014 decreased 0.6% to $650.2 million compared with $653.8 million for the same period last year.  On a comparable store basis, year-to-date sales declined 1.5% versus a 1.1% decrease for the year-earlier period.

“The initial results (of the marketing and branding program) were encouraging,” said CEO Bruce A. Efird, “and we think this new program will be effective in driving traffic and sales growth as we work toward full implementation of the marketing program by mid-July.  Together with the updating of our store layout to emphasize the convenience advantages of our 15,000 sq. ft. store, it will better position Fred’s to serve more of the need-based categories and provide customers with faster and easier shopping experiences.”

Fred’s operates 704 discount general merchandise stores, including 21 franchised Fred’s stores, in the southeastern United States.

Source: Retailing Today

June 6, 2014

U.S. retailers reported 5% year-over-year growth in general merchandise, apparel, furniture and other (GAFO) retail sales.  Shoppers made fewer trips to the store than expected, but were very engaged and showed a lot of intent to buy.

Retailers also reported 7% growth year-over-year in clothing and apparel sales and 2% growth year-over-year in general merchandise sales.  Shopper traffic declined 11% compared to the same month last year, as travel plans appeared to cannibalize leisure time.

Storefront conversion was up slightly as this May remained more promotional the same month in the proir year, especially leading up to Mother’s Day.  Average duration increased 6% from the previous year due to a rebounding interest in more exploratory shopping, following the muted winter months.  The increase in visit duration was the most significant driver of positive sales performance in May.

Source: Retailing Today