FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

US MANUFACTURING INDEXES TAKE A DIVE; STOCK LEVELS REACT

The New York Empire Manufacturing Index dropped to -9.02 from April’s positive 9.56 in May, missing estimates for a slight decline to positive 7.0. Stocks reacted negatively to the news, but were offset by gains in the energy and industrial sectors. Domestically oriented US manufacturers are seeing steadier business with bright auto, housing and job markets, while global manufacturers are struggling in markets from Brazil to Europe to China.

“Domestic demand is what has been supporting the manufacturing sector overall and preventing a sharper downturn,” said Gregory Daco, chief U.S. economist at Oxford Economics. “Domestic-oriented sectors are faring relatively well.”

Earlier in May, the Institute for Supply Management also reported its index results, but showed manufacturing activity already falling from March. A strong US dollar and low oil prices, plus weakness overseas, depressed demand for US exports.

The Philadelphia Federal Reserve also reported a decline in its index, reporting that mid-Atlantic manufacturing activity declined for the 8^th time in 9 months.

These reports maintain the overall picture of sluggish economic growth, and a newfound possibility that the Federal Reserve could raise interest rates as soon as June.

Sources: WSJ, Nasdaq.com, Investors.com, CalculatedRiskBlog.com 

US Manufacturing PMI Decreases in April

The Manufacturing Purchasing Managers’ Index (PMI), which measures the performance of the managing sector based on five weights: New Orders (30%), Output (25%), Employment (20%), Supplier Delivery Times (15%) and Stock of Items Purchased (10%), decreased in the US In April.

A reading above 50 indicates an expansion of the manufacturing sector, while below 50 represents a contraction. April PMI in the US decreased to 54.2 from 55.7 in March. Manufacturing PMI in the US averaged 54.24 from 2012 until 2015, reaching an all-time high of 57.9 in August 2014 and a record low of 51 in November 2012. This rate of expansion was the slowest so far in 2015.

Japan, China, France, Germany and the US all reported readings that decreased from expectations. Japan, China and France had readings below 50. This is a continued downward trend for Japan and China. Numbers were a reversal for Germany and the US, which had been producing some great numbers so far this year.

US survey respondents generally cited softer new business gains, especially from international markets. This contributed to a softer increase in pre-production inventories. Supplier lead times lengthened for the twenty-second month, with a number of companies noting ongoing transportation delays at west coast ports at the beginning of the year.

Sources: Bloomberg, Trading Economics

AAFES CONDUCTS FIRST-EVER EXCHANGE IMPACT WORKSHOP TO DETAIL GO TO MARKET STRATEGIES

The Army and Air Force Exchange Service (AAFES) conducted a workshop in Dallas, detailing the Exchanges’ go to market strategy, with over 50 AAFES representatives and an audience of manufacturers, brokers, distributors and service providers. The goal of the workshop was to simplify the process of selling to AAFES.

AAFES representatives discussed store repositioning strategies and individual category breakouts including hard lines, soft lines, consumables and e-commerce. They also covered legislative and policy issues affecting military resale. The average company can take two to four years to navigate the military resale environment, but a workshop such as this one can help shorten that to a six to twelve month learning curve.

The workshop was led by AAFES Chief Merchandising Officer Ana Middleton.

Resource: Retailing Today

Industrial Production Gets Small Gain Despite Drop in Manufacturing in February

Industrial production, measuring the output of manufacturers, utilities and mines, rose .1% in February from January. Cold weather caused an increase in utility output, but factory and mining production declined, lowering capacity utilization two-tenths to 78.9%, instead of economist expectation of gains to 79.5%. Lower capacity utilization could prompt businesses to wait on investments.

Manufacturing, the bulk of all industrial output, declined for the third straight month, a development the Fed attributed largely to weak demand for long-lasting goods. “Manufacturing has started 2015 on a softer note than we had expected and if we do not see a pickup in the next few months we will have to consider notching down our 3% real GDP growth forecast for 2015,” John Ryding of RDQ Economics said in a note to clients. Economists said cold weather, while boosting utilities, may have crimped factories.

Resource: Wall St. Journal