5 posts categorized "Retail"

Business survey: Ninth District should continue to grow

Results from a Federal Reserve Bank of Minneapolis ad hoc survey of 603 Ninth District firms (see methodology) reveals that economic activity at firms across industry sectors increased over the past four quarters and should continue over the next four quarters (see table).

Looking back: Firms across industries reported increased sales revenue, profits, productivity and employment. The availability of labor decreased, especially in the construction sector, where the majority of respondents reported a lack of available labor. Respondents from most sectors reported increases in selling prices and input costs. Wage and benefit increases were moderate. They also noted an uptick in availability of financing.

Looking forward: Respondents are more optimistic for the next four quarters, as a higher proportion of respondents reported expectations for increased sales revenue, profits, productivity and employment. The availability of labor is expected to continue to decrease. Respondents expect to raise prices and pay more for inputs. However, wage and benefit increases are expected to be moderate.

State economic outlook: Respondents expect their state economies to grow as well. Employment, consumer spending and profits are all expected to increase. However, the vast majority of respondents across industries expect inflation to increase.

August ad hoc table -- 8-21-14

Ad hoc survey methodology: On Monday, August 18, an email was sent to 5,000 contacts (not a random sample) from various sectors around the Ninth District. By 12 noon Wednesday, August 20, 603 responses were received, representing a 12 percent response rate. The largest number of responses came from finance (24 percent), professional services (20 percent), manufacturing (15 percent), real estate (13 percent), construction (8 percent) and nonprofits (7 percent).

More evidence that businesses expect to grow, increase hiring

Signs are upbeat that the Ninth District economy will continue to grow, according to a recent poll of more than 300 business contacts from across the district (see methodology below).

For starters, 40 percent plan to increase employment at their firms, and nearly three-quarters of these firms cited expected high sales growth as the most important factor. Only 7 percent plan to decrease employment. In the same survey a year ago, 38 percent planned to increase employment and 10 percent planned to cut jobs.

Other important factors cited for new hiring were overworked staff, improved financial condition of firms and the need for additional skills. The majority of respondents plan to use word of mouth and advertising to get new employees. Twenty-eight percent plan to use a recruiting firm, and surprisingly few (9 percent) plan to raise starting pay.

For those respondents not planning to hire additional people this year, most expected low growth sales and a desire to keep operating costs low. Many reported difficulty finding skilled candidates. Though fiscal policy developments were not a factor for most respondents, 35 percent said they had a detrimental effect on hiring and 4 percent said they would increase hiring plans.

The survey also asked about wages and benefits; 36 percent expected wage growth of 2.5 percent or more, and a similar amount expected positive wage growth of less than 2.5 percent (see Chart 1). Respondents generally believed benefit increases would be larger than those for wages (see Chart 2).

  Ad hoc survey Ch 1-2 -- 2-5-13

Methodology: On Jan. 15, the Minneapolis Fed invited, via email, about 1,000 Beige Book contacts from across the Ninth District to answer the special question in a web-based survey. By Jan. 31, 303 contacts had filled out the survey. The respondents come from a variety of industries (see table below).

Ad hoc survey METHOD TABLE -- 2-5-13

Beige Book, Minneapolis: Ninth District economy slowly improving

The Ninth District economy expanded modestly during late summer and early fall, according the most recent Beige Book released this week by the Federal Reserve Bank of Minneapolis.

Each of the 12 Federal Reserve district banks drafts a similar report, which in sum are a summary of regional economic conditions across the country, in preparation for the Oct. 23-24 Federal Open Market Committee meeting, where interest rates and other monetary policy issues are decided.

In the Ninth District, improved activity was seen in construction and real estate, consumer spending, tourism and professional services. Energy and mining continued to perform at high levels, while agriculture varied widely, with crop farmers generally in better condition than animal producers. On the softer side, manufacturing activity slowed in late summer, and wage increases remained subdued, although stronger increases were reported in some areas. But labor markets tightened somewhat, and price increases were generally modest.

For those interested in other regional, national or historical Beige Book reports on economic conditions, the Minneapolis Fed offers everything in one spot.

Minnesota job vacancies: Good news, with caveats

Job vacancies in Minnesota climbed 48 percent in the fourth quarter of 2011 compared with the same period a year earlier, according to a semi-annual survey recently released by the Minnesota Department of Employment and Economic Development (DEED).

That pencils out to almost 50,000 job openings last quarter—back to fourth quarter levels last seen in 2007, though short of the 65,000 vacancies in 2006. The survey also found that vacancies increased across a wide range of industry sectors (see Chart 1). In all, there were 3.2 unemployed people for each vacancy, compared with 5.8 a year earlier.

While certainly moving in the right direction, job vacancies still have some way to go before spurring the type of employment market many hope for. For example, DEED said 42 percent of the job vacancies were for part-time employment and another 13 percent were for temporary or seasonal work. The median wage offer for all job vacancies was $10.89 an hour—slightly lower than median wages seen in the same quarter of 2007 and 2008.

A breakdown of vacancies also shows that industry sectors with the greatest percentage of growth and the largest number of job vacancies generally offer lower wages (see Charts 1 and 2). This isn’t necessarily a surprise, or even a change. A look back at vacancies in the fourth quarter of 2006 shows a similar relationship regarding industry sector vacancies and median wages (see Chart 2).

Industry sectors like retail and accommodation employ many workers, are generally low-paying and typically see high turnover, which means they are perpetually looking for workers. In fact, health care traditionally has the most vacancies, reflecting the fact that it is a large and still-growing industry despite a sluggish economic recovery. Even though there are many high-paying jobs in the field, median wages for vacant jobs are just $11, a shade higher than the median wage for all vacancies. The biggest difference in job vacancy distribution among industry sectors is in transportation and warehousing, where vacancies remain considerably below 2006 levels (see Chart 2).

MN job vacancies -- Chart 1&2 -- 3-2-12


 

Red-light special: Lower consumer debt levels

This Christmas shopping season is shaping up to be fairly robust. The National Retail Federation was forecasting a modest increase of about 3 percent for this holiday season, but later reported that shoppers spent a record $52 billion during the kickoff Black Friday weekend.

If Santa proves to be comparatively generous this year, the reasons are likely many. For example, consumer confidence has been on the rise of late, according to indexes from both the Conference Board and the University of Michigan.

Households might also be feeling better about their financial ability to splurge a little because per capita debt has fallen across the district since the start of the recession, according to the Consumer Credit Panel, produced quarterly by the Federal Reserve Bank of New York (see Chart 1). Somewhat ironically, the lone anomaly in that trend is flattening debt in North Dakota, whose economy never officially went into recession and has seen strong job and wage growth. Minnesota is also notable for the fact that its average debt is considerably higher than any other district state, including Wisconsin, with which it shares many social and economic similarities.

Panel data for 2011 are not available for all states. But the panel tracks a set of 11, mostly larger, U.S. states (including Michigan) on a more regular basis, and debt trends continue to be favorable for this group. For example, much of the average debt is buried in home mortgages. States vary in the amount of total debt made up of mortgages; nationwide it’s a little less than 80 percent. But total mortgage debt has continued to drop through the third quarter of this year, according the New York Fed figures. Equally important in terms of purchasing power, other outstanding debt (like credit cards and home equity and auto loans) also has been falling, save for a tiny bump in the third quarter of this year (see Chart 2).

Some of the debt improvement might be a tad superficial, such as debts discharged through bankruptcies, which remain elevated. But other indicators suggest better overall financial health. For example, the percentage of mortgages more than 90 days late nationwide has fallen five consecutive quarters (through the second quarter of 2011, the most recent panel data). In Michigan, the percentage of seriously delinquent mortgages fell from a peak of 7.8 percent in the fourth quarter of 2009 to 5.7 percent last summer; the percentage of consumers with new foreclosures also has been cut in half since its peak in the second quarter of 2009.

District debt -- Charts 1-2    12-16-11

The New York Fed’s Consumer Credit Panel consists of detailed credit-report data from the private firm Equifax that allow for longitudinal quarterly data on individuals and households from 1999 to 2011. The panel is a nationally representative 5 percent random sample of all individuals with a Social Security number and a credit report (usually aged 19 and over). Additional individuals living at the same address are also sampled, which allows the panel to track household-level credit and debt. The resulting database includes approximately 40 million individuals in each quarter.

 

 

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