NFIB October Survey
Consumer spending fell in October, according to new CNBC/NRF Retail Monitor tracking card transactions
The consumer took a spending break ahead of the holiday season, with October retail sales, excluding autos and gas, falling by 0.08%, and core retail, which also removes restaurants, declining by 0.03%, according to the new CNBC/NRF Retail Monitor.
The new Retail Monitor, debuting Monday, is a joint product of CNBC and the National Retail Federation based on data from Affinity Solutions, a leading consumer purchase insights company. The data is sourced from more than 9 billion annual credit and debit card transactions collected and anonymized by Affinity and accounting for more than $500 billion in sales. The cards are issued by more than 1,400 financial institutions. (…)
Year over year, overall retail and core retail sales are both up 2.6%. (…)
- Holiday Hiring Demand Drops Off, a Warning for the Job Market Stores and warehouses are adding fewer extra workers and finding it easier to fill those roles
The number of seasonal positions publicly advertised this fall fell to the lowest level in a decade, according to outplacement-services firm Challenger, Gray & Christmas. The National Retail Federation estimates that between 345,000 to 445,000 seasonal workers will be hired this year, down as much as 40% from a recent high in 2021.
Shipping company XPO said it expects its head count to stay flat in the last three months of the year. The U.S. Postal Service said it would hire about one-third of the seasonal workers added last year. Macy’s announced that it was seeking about 3,000 fewer seasonal workers than in 2022. Target and United Parcel Service are expected to bring on a similar-size extra staff as last year. (…)
The National Retail Federation expects spending this holiday season, which it defines as Nov. 1 through Dec. 31, to grow 3% to 4%. That would be down from a 5.4% increase in holiday sales last year and a 12.7% jump in 2021, according to Commerce Department figures.
Second, retailers and logistics companies have caught up on pandemic staffing shortfalls and can meet additional demand by having current part-time employees work more hours. (…)
Warehouses and transportation companies employed 25,000 fewer people in October than a year earlier, after adding more than 400,000 workers over the prior year, according to the Labor Department. Retailers added 60,000 workers in October from a year earlier, a smaller annual increase than in the two previous years in the month when seasonal hiring starts to pick up.
Job openings in both sectors were down more than 15% at the end of September from a year before. (…)
Companies unable to find workers in recent years also invested in labor-saving technology, and now may need fewer workers. For example, nearly a third of grocery-store transactions used self-checkout last year, according to FMI, the Food Industry Association. (…)
The new World Robotics report recorded 553,052 industrial robot installations in factories around the world – a growth rate of 5% in 2022, year-on-year. By region, 73% of all newly deployed robots were installed in Asia, 15% in Europe and 10% in the Americas.
(…) “In 2023 the industrial robot market is expected to grow by 7% to more than 590,000 units worldwide.”
China is by far the world´s largest market. In 2022, annual installations of 290,258 units replaced the previous record of 2021 by growth of 5%. This latest gain is remarkable since it even tops the 2021 result that was a 57% jump compared to 2020. To serve this dynamic market, domestic and international robot suppliers have established production plants in China and continuously increased capacity. On average, annual robot installations have grown by 13% each year (2017-2022). (…)
In the Americas, installations were up 8% to 56,053 units in 2022, surpassing the 2018 peak level (55,212 units). The United States, the largest regional market, accounted for 71% of the installations in the Americas in 2022. Robot installations were up by 10% to 39,576 units. This was just shy of the peak level of 40,373 units achieved in 2018. The main growth driver was the automotive industry that displayed surging installations by +47% (14,472 units). The share of the automotive industry has now grown back to 37%, followed by the metal and machinery industry (3,900 units) and the electrical/electronics industry (3,732 units).
The two other major markets are Mexico – here installations grew by 13% (6,000 units) – and Canada, where demand dropped by 24% (3,223 units). This was the result of lower demand from the automotive industry – the strongest adopter. (…)
Facts video on industrial robot shipment at the IFR YouTube channel: https://youtu.be/mtxMYJz4v2Y
China Mulls $137 Billion of New Funds to Aid Housing Market The plan is Beijing’s latest effort to shore up the struggling property market.
The People’s Bank of China would inject funds in phases through policy banks with the money ultimately trickling down to households for home purchases, the people said, asking not to be identified discussing a private matter. Officials are considering options including the so-called Pledged Supplemental Lending and special loans, the people said, adding that the government may take the first step as soon as this month. (…)
Dubbed by some as “helicopter money,” PSL allows the central bank to provide low-cost funds through policy and commercial lenders to the developers of the shantytown renovation projects. Developers then use the money to buy land from local governments, which in turn give cash subsidies to households whose old homes were demolished so they can purchase newly-built or existing apartments, driving up demand. (…)
China has ordered its local governments to halt public-private partnership projects identified as “problematic” and replaced a 10% budget spending allowance for these ventures with a vetting mechanism by Beijing as it tries to curb municipal debt risks. (…)
Local government debt reached 92 trillion yuan ($12.6 trillion), or 76% of China’s economic output in 2022, up from 62.2% in 2019, according to the latest data from the International Monetary Fund.
In an effort to constrain the accumulation of further debt, Beijing will eliminate a regulation allowing local governments to earmark up to 10% of their annual public budget expenditures toward these projects, the sources said.
The 10% expenditure threshold will now be replaced with government authorities’ review of each PPP project, they said. The move comes after numerous local governments’ PPP expenditure hit the upper limit of the threshold in recent years.
The State Council also asked the local governments to halt “problematic projects”, identified in inspections conducted by the National Audit Office (NAO) earlier this year, and address the identified issues, said the sources.
Projects designated as “problematic” are those riddled with irregularities including in which local government financing vehicles (LGFVs) posed as the “private” partner, spurring excessive debt accumulation, one of the sources said.
In addition to those measures, all PPP projects that have not finished bidding process to find partners by February this year will have to be suspended, said the two sources, who have direct knowledge of the State Council document.
Since 2014, Beijing has promoted a PPP model to channel private money into public infrastructure projects, to increase capital investment while easing the burden on heavily-indebted local governments.
But the PPP boom has alarmed authorities who say some local governments have used public-private partnerships, government investment funds and government procurement services as “disguised channels” for raising debt. (…)
As of the end-2022, China had implemented more than 14,000 PPP projects with the value of investment worth 20.9 trillion yuan ($2.87 trillion), or roughly the size of France’s economy, according to a research note by Bank of China. (…)
Reuters reported last month, citing sources with knowledge of the matter, that China has told state-owned banks to roll over existing local government debt with longer-term loans at lower interest rates.
The National Development and Reform Commission (NDRC), the top planner, and the finance ministry last week issued rules to encourage private firms to invest in PPP programs and allow them to take controlling stakes in some of those projects. (…)
Investors Dump Cash to Chase Bonds, BofA Survey Shows Investors turn to the first equity overweight since April 2022
(…) The BofA survey showed the conviction of peak Fed rates is now the strongest since the poll began asking investors to time the end of the rate hiking cycle. That’s prompted cautious investors to cut cash levels to 4.7% from 5.5%, down to a two-year low. (…)
“Investor playbook for 2024 is soft landing, lower rates” and a weaker dollar, the strategist wrote. (…)
But Reuters tells us that
U.S. corporate bond investors were focusing on companies deemed best able to withstand an economic downturn, according to a November survey by Bank of America (BAC.N) which found 59% of those surveyed listing a potential mild recession as their top concern, up from 56% in its prior survey.
Some 31% of survey participants saw a soft landing: slower but positive growth and lower inflation which translated to a relatively benign outlook for the U.S. economy in 2024. (…)
‘Great Quarter, Guys’ Fades for CEOs on Tougher Earnings Calls Kudos during earnings calls are down 29% so far this quarter
“Good quarter,” “congratulations” and similar plaudits are drying up on quarterly earnings calls for S&P 500 companies, setting up 2023 for the biggest such annual decline since the Great Recession. The drop is even more pronounced when compared with the pandemic era, running 35% below the average pace in the previous three years.
“Fewer companies are doing well,” said Alex Zukin, an analyst covering software companies at Wolfe Research. “There’s a higher volume of companies that are in a difficult environment really for the first time.”
It’s not that the recent quarterly results have been atrocious – in fact, 82% of S&P 500 members that have issued results so far topped analysts earnings expectations by an average of 7.6%, according to data compiled by Bloomberg, about double the average beat last year.
Still, even when the numbers are good, analysts may refrain from complements when the economic backdrop appears to be deteriorating. “There’s some sensitivity around giving someone a pat on the back in a tougher environment,” Michael Turrin, an analyst covering enterprise software stocks at Wells Fargo & Co., said in an interview. (…)