Author: Chad Symens

The Conference Board Consumer Confidence Index, which had decreased in November, rebounded in December.  The Index now stands at 78.1, up from 72.0 in November.  The Present Situation Index increased to 76.2 from 73.5.  The Expectations INdex increased to 79.4 from 71.1 last month.

“Consumer confidence rebounded in December and is now close to pre-government shutdown levels (September 2013, 80.2).  Sentiment regarding current conditions increased to a 5 1/2 year high (April 2008, 81.9), with consumers attributing the improvement to more favorable economic and labor market conditions.  Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately pessimistic about their earning prospects.  Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began”, says Lynn Franco, Director of Economic Indicators at The Conference Board.

Consumers’ appraisal of overall current conditions improved.  Those claiming business conditions are “good” edged down to 19.6 percent from 20.4 percent.  Consumers’ appraisal of the job market was also more upbeat.  Those saying jobs are “plentiful” ticked up to 12.2 percent from 12.0 percent, while those saying jobs are “hard to get” decreased to 32.5 percent from 34.1 percent.

Consumers’ expectations, which had decreased in November, improved in December.  The percentage of consumers expecting business conditions to improve over the next six months increased to 17.2 percent from 16.7 percent, and those expecting business conditions to worsen decreased to 14.0 percent from 16.1 percent.

Consumers’ outlook for the labor market was considerably more optimistic.  Those anticipating more jobs in the months ahead increased sharply to 17.1 percent from 13.1 percent, while those anticipating fewer jobs decreased to 19.0 percent from 21.4 percent.  The proportion of consumers expecting their incomes to increase declined to 13.9 percent from 15.3 percent, while those expecting a decrease in their incomes declined to 14.0 percent from 15.5 percent.

Source: December 2013 Consumer Confidence Survey, The Conference Board

WSJ, WASHINGTON—U.S. industrial output in November surpassed its prerecession peak for the first time, the latest sign of momentum for the economic recovery.

Industrial production, which measures the output of U.S. manufacturers, utilities and mines, surged a seasonally adjusted 1.1% from the prior month, the Federal Reserve said Monday. That was the biggest jump in a year.

The ascent in part reflects big gains for volatile mining and utilities components, though underlying figures point to steadily rising demand for an array of industrial goods. “It does look like there is a little momentum building here,” said J.P. Morgan economist Daniel Silver. “We’re getting a little more optimistic as we get these numbers.”

Manufacturing, the largest component of industrial production, remains below its prerecession peak. But the sector expanded 0.6% in November, the fourth straight month of gains. Overall factory output is up 2.9% from a year earlier.

Source: WSJ, Jeffrey Sparshott

Retailers saw sales decrease the week ending December 7 of 1.6% versus Thanksgiving week. However, Cyber Monday sales of online shopping reached $1.7 billion, an increase of 18% over 2012. This is recorded as the “heaviest online spending day” by comScore. Cyber Monday was the second day this holiday season to exceed $1 billion – Black Friday reached $1.2 billion in sales.

For the week of December 1-7, sales were weak across the board in retail, with a notable exception of department stores such as Dillard’s, Macy’s and Kohl’s.

Consumers surveyed reported a lower number of buyers completing their holiday shopping, implying that the pace of shopping before the Christmas holiday will ramp up.

Cyber Monday sales this year fall into the December reporting period while it was in November in 2012. This should lift December sales results.

Economic activity in the manufacturing sector expanded in November for the sixth consecutive month, and the overall economy grew for the 54th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report on Business.

The PMI* registered 57.3 percent, an increase of 0.9 percentage point from October’s reading of 56.4 percent. The PMI has increased progressively each month since June, with November’s reading reflecting the highest PMI in 2013.  The New Orders Index increased in November by 3 percentage points to 63.6 percent, and the Production Index increased by 2 percentage points to 62.8 percent.  The Employment Index registered 56.5 percent.  With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing. 

*A PMI in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the November PMI indicates growth for the 54th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the sixth consecutive month.  The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (53.7 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for November (57.3 percent) is annualized, it corresponds to a 4.7 percent increase in real GDP annually.

Source: ISM Report on Business

Visa provided some details on holiday transaction volumes and they are very encouraging.

• Nov 28 – $0.99 billion spent (up 30% from LY), 14 million transactions (up 29% from LY)
• Nov 29 – $1.7 billion spent (up 24% from LY), 21 million transactions (up 24% from LY)
• Nov 30 – $1.3 billion spent (up 37% from LY), 19 million transactions (up 33% from LY)
• Dec 1 – $1.2 billion spent (up 45% from LY), 18 million transactions (up 41% from LY)
• Dec 2 – $2.6 billion spent (up 28% from LY), 28 million transactions (up 29% from LY)
• 5 day total – $7.8 billion spent (up 30% from LY), 100 million transactions (up 28% from LY)
• Average transaction size $77.82

Even before its final round of deals kicked in at Walmart on Friday morning, the retailer announced that sales had exceeded last year’s record-breaking results with 10 million transactions completed between 6 p.m. and 10 p.m. on Thanksgiving.

“Our Black Friday events were bigger, better, faster, cheaper and safer than ever.  More customers chose us, we had the prices and products they were looking for, and we’re not finished yet,” said Walmart U.S. president and CEO Bill Simon.

Last year, Walmart said it served 22 million customers on Thanksgiving day.  This year, the company said even more customers shopped its stores, but stopped short of saying how many more.  It did say that more than one million customers took advantage of its one hour in-stock guarantee program, which was extended to cover 21 items this year compared to just three when it was introduced last year.

Traffic to Walmart’s website was strong with nearly 400 million page views on Thanksgiving day, including customers who used mobile devices and tablets.  The company is looking for the online momentum to continue with 200 Cyber Week deals that started on November 30 and will extend until December 6.

Source: Retailing Today

WASHINGTON—U.S. employers continued to add jobs at a steady pace and the unemployment rate fell in November, a sign of stronger economic growth that may intensify debate within the Federal Reserve about reducing central bank bond purchases as early as this month.

U.S. payrolls rose by 203,000 last month, the Labor Department said Friday. The unemployment rate dropped three-tenths of a percentage point to 7.0%, the lowest level in five years. Economists surveyed by Dow Jones Newswires had forecast nonfarm payrolls would rise by 180,000 and the unemployment rate would tick down to 7.2%. September and October payroll numbers were revised up by a combined 8,000.

Friday’s report may reinforce expectations that the Fed will soon slow the pace of its $85 billion a month in bond purchases. At their October meeting, officials were looking to end the program “in coming months.” The Fed’s program, started in September 2012, is designed to keep long-term interest rates low, boost investment and spur hiring.

*source WSJ.com

HOFFMAN ESTATES, Ill., Dec. 6, 2013 /PRNewswire/ — Sears Holdings Corporation (NASDAQ: SHLD) announced that, in connection with its previously announced consideration of a separation of its Lands’ End business, Lands’ End, Inc. filed today a registration statement on Form 10 with the Securities and Exchange Commission. Sears Holdings intends to spin off its Lands’ End business through the pro rata distribution of all of the shares of common stock of Lands’ End, Inc. We expect that the spin-off will be tax-free to U.S. stockholders except for any cash received in lieu of fractional shares. The spin-off is subject to the approval of the Board of Directors of Sears Holdings and the satisfaction of certain other conditions. Sears Holdings may, at any time until the spin-off, decide to abandon the spin-off or modify or change the terms of the spin-off. Holders of Sears Holdings common stock as of the record date for the spin-off will not be required to make any payment, surrender or exchange any shares of Sears Holdings common stock or take any other action to participate in the spin-off. Additional information concerning Lands’ End and the proposed spin-off is contained in the registration statement on Form 10.

The Conference Board Leading Economic Index for the U.S. increased 0.2 percnt in October to 97.5, following a 0.9 percent increase in September, and a 0.7 percent increase in August.

“The modest rise in the Leading Economic Index in October follows the strong advances recorded in the prior two months, which helps lift the six-month annualized growth rate to 5.1 percent from 3.7 percent in the previous six months,” said Kathy Bostjancic, Director of Macroeconomic Analysis at The Conference Board.  “The recent increase in the index supports our forecast that the U.S. economy is poised to grow somewhat faster at 2.3 in 2014 compared to 1.6 percent in 2013.  Within the details, the sub-indexes contributing positively to growth are the financial, housing and manufacturing variables.  Restraining growth is the ongoing caution of businesses that continue to keep tight reigns on capital expenditures.”

“The U.S. LEI has increased for four consecutive months,” said Ken Goldstein, Economist for The Conference Board.  “Overall, the data reflect strengthening conditions in the underlying economy.  However, headwinds still persist from the labor market, accompanied by business caution and concern about federal bucget battles.  The biggest challenge to date has been relatively weak consumer demand, which continues to be restrained by weak wage growth and slumping confidence.”

The Coincident Economic Index increased 0.2 percent in October to 106.9, following a 0.3 percent increase in September, and a 0.3 percent increase in August.

The Lagging Economic Index increased 0.3 percent in October to 119.7, following a 0.5 percent increase in September and a 0.2 percent increase in August.

Source: The Conference Board

The Conference Board Consumer Confidence Index, which had decreased sharply in October, declined again in November.  The Index now stands at 70.4, down from 72.4 in October.  The Present Situation Index edged down to 72.0 from 72.6.  The Expectations Index declined to 69.3 from 72.2 last month.

“Consumer confidence declined moderately in November after sharply declining in October.  Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed.  However, these sentiments did not carry over into the short-term outlook.  When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions.  All in all, with such uncertainty prevailing, this could be a challenging holiday season for retailers”, said Lynn Franco, Director of Economic Indicators at The Conference Board.

Consumers’ assessment of overall current conditions decreased slightly.  Those claiming business conditions are “good” edged up to 19.9 percent from 19.5 percent, while those claiming business conditions are “bad” increased to 25.2 percent from 23.0 percent.  Consumers’ appraisal of the job market was little changed.  Those saying jobs are “plentiful” ticked up to 11.8 percent from 11.6 percent, while those saying jobs are “hard to get” decreased slightly to 34.0 percent from 34.9 percent.

Consumers’ expectations, which had decreased sharply in October, declined further in November.  Those expecting business conditions to improve over the next six months increased slightly to 16.6 percent from 16.0 percent, while those expecting business conditions to worsen decreased to 16.8 percent from 17.5 percent.  However, consumers’ outlook for the labor market was more pessimistic.  Those anticipating more jobs in the months ahead fell to 12.7 percent from 16.0 percent, but those anticipating fewer jobs also decreased to 21.7 percent from 22.6 percent.  The proportion of consumers expecting their incomes to increase declined to 14.9 percent from 15.7 percent.  Those expecting a decrease in their incomes rose slightly to 15.9 percent from 15.5 percent.

Source:  November 2013 Consumer Confidence Survey, The Conference Board