SB Authority: Discretionary Consumer Spending Slowed Down in May

The index issued by the SB Authority reveals that economic activity of small businesses increased a mere 0.35 percent in May compared to the previous month. The index for May reached 104.89 points. The small increase was driven mostly by the creation of new businesses and the Russel microcap.

The index registers monthly results on six other components – the prime rate, default loan rate of small business, processing volumes of merchants, reports on national employment, retail sales, and loan origination.

The chief executive officer and president of Newtech Business Solutions, Barry Sloane, said that the US economy was slowing down despite federal efforts. He explained that the slow-down trend continued despite the fact that the Federal Reserve purchased assets worth trillions of dollars from financial institutions, and the 600 million dollars invested in long-term government obligations. Also, budgetary stimulus does not appear to have any positive impact yet. Barry Sloane added that rising employment and the discretionary spending of consumers are the two main factors on which small businesses rely on to increase their economic activity.

As consumers increase their savings to protect themselves from loss of income in a climate characterized by job insecurity, their spending decreases, they pay less and less of their debt and they have to face rising energy and food costs. This consumer behavior also prompts small businesses to put a hold on their investments and employment for future growth.

Newtech provides business services to more than 100,000 companies. The US is estimated to have some 27.5 million small and medium-sized companies, which account for almost 99.7 percent of American employers.

 

TD Economics: Manufacturing Industry in North Carolina Transitions to High Tech

TD Economics, a TD Bank affiliate, finds in its latest report that the economy of North Carolina continues its transition period and, while the economy diversifies, it will gradually become increasingly resistant to economic downturns.

The author of the TD Economics report, economist Christos Shiamptanis, said that the transition is a necessary evil, as the state’s manufacturing sector moves from traditional industries like apparel and textiles to biotechnology, high-tech and services. He added that the state’s economic output is boosted by the improved productivity and the enhanced efficiency of high-tech businesses. These businesses also require high-skilled workers, and high-skill jobs are more resilient to negative economic evolutions than middle-skilled positions.

The report identifies several growth opportunities for the state of North Carolina, which include a shift to industries with high potential, such as pharmaceutical and electronics, the strong research universities with world-class educational programs and the development of technology business clusters.

Shiamptani, explaining the potential of North Carolina, said that the decade of 1999-2009 the output of electronics and computer manufacturing increased by 569 percent, way above the national average, while production of chemicals grew by 9 percent, in the context of national production dropping 3 percent. He added that high-tech manufacturers and pharmaceutical companies tend to stay above the floating line even in crisis times. If the state’s economy were to transition to these types of businesses, the manufacturing jobs in this area of the country should not be as volatile as they currently are.

The transition to pharmaceutical, biotechnology and high-tech production is even more necessary since the traditional manufacturing businesses have a much less optimistic outlook and declines will most probably persist.

 

NCVA, Deloitte: Health of World Venture Capital Markets Depends on Strong IPOs

Venture capitalists worldwide believe that the current IPO activity is too weak, and it will not support a healthy industry in their respective national economies.

In a recent survey by NCVA and Deloitte, approximately 80 percent of the polled venture capitalists said that their countries were registering very low levels of initial public offerings. The survey also reveals that many venture capitalists see the high returns from initial public offerings as key to achieving high returns to portfolio companies in development and to limited partners.

Venture capitalists from France, India, Brazil, China and the US were the most energetic in stating the importance of having a very active IPO market in their national markets, followed by Israel, Germany, Canada and the United Kingdom.

In the US, 91 percent of the respondents said that an active and healthy IPO market was vital to the country’s venture capital markets. However, only 36 percent said that other countries’ IPO markets had an impact over the success of the US industry.

Moreover, 87 percent of the polled venture capitalists said that the current US IPO activity was too low, as the global venture capital industry was looking to the US to provide a healthy market.

Worldwide, 87 percent of the participants in the survey said that the stock exchange with the greatest potential for venture-backed initial public offerings was NASDAQ, followed by NYSE, with 39 percent, and the Shanghai Stock Exchange, with 33 percent.

Deloitte & Touche partner, Mark Jensen, said that the industry was clearly still affected by the fallout of economic downturn, especially through a less than desirable number of exit opportunities. However, he added, as the liquidity crisis eases and the economy shows signs of improvement, a most sought-after turn of tide might be close.

US RBC Bank to Be Acquired by PNC

Royal Bank of Canada (RBC) and the financial services company PNC announced today that they entered an agreement for RBC’s subsidiary in the US, RBC Bank USA, to be acquired by PNC for the price of 3.45 billion dollars.

The acquisition of RBC Bank USA will grant PNC access to very attractive markets in the southeast of the country, while adding value for PNC shareholders, explained the chief executive and chairman of PNC, James Rohr.

He added that the company’s recent acquisitions have demonstrated through their success that the company’s products are able to gather new clients and reduce costs, and the current transaction represented an incredible opportunity for the company’s growth.

RCB Bank, based in Raleigh, North Carolina, has 424 branches in South Carolina, Virginia, Georgia, Alabama, Florida, and North Carolina. After the acquisition, the two companies will have a total of 2,870 branches, pushing them to the fifth position in the top of US banks.

The transaction is expected to be accretive to PNC’s earnings in 2013, based on how much of the transaction price of 3.45 billion dollars will be paid in common stock. PNC has the option to pay RBC about one billion dollars in common stock, representing three percent of PNC’s shares at the price of 57.79 dollars, the closing price on Friday, June 17.

The acquisition offer represents some 97 percent of the current value of RBC Bank USA, based on the bank’s April balance sheet.

After the transaction is finalized, PNC could incur planned integration and merger costs of some 322 million dollars. PNC estimates that, after the merger, RBC Bank’s non-interest expenses would be reduced by approximately 230 million dollars through the improvement of administrative and operational efficiency.

The estimated closure date is estimated to be March 2012. The merger agreement has been approved by the management boards of both companies. The current price is subject to adjustments, based on the value of delivered tangible assets at the time of closing the transaction.

The Young Generation, the Only Age Group Increasing its Spending on Golf

While golf remains a game favored mostly by well-off baby boomers, the young generation shows increasing interest, as suggested by their increasing spending on the sport. Furthermore, there are several new regions that appear promising.

According to the 2011 Spend Sights report for consumer and business golf spending in US released by Business Insight, young individuals aged 18-29 years old increased their spending on golf by 27 percent from the first quarter of 2007 and the first quarter of 2011.

The report further shows that, over the same period of time, other age groups presented considerable decrease in golf spending – 33 to 45 year-olds and 46 to 66 year-olds by 19 percent, and seniors (above 66) by 21 percent.

The report analyzed the patterns of spending at private and public golf courses and at retail locations across the US.

Golf spending has been significantly affected by the financial crisis. The current report, while it does not indicate a full recovery in spending, reveals that in the first quarter of 2011 the year-over-year spending on golf apparel and equipment increased by 10 percent.

Furthermore, the report noted the emergence of several new golf destinations, considered being prime locations in their state. The new locations were identified based on the increase in spending, such as a 40 percent increase in South Dakota, and 12 percent in each Delaware and Iowa.

Gulf locations that were previously considered top spots and receiving most of the money spent on golf (up to 49 percent of the total), posted some year-over-year decreases in 2010 – Florida by 14 percent, California by 10 percent, Georgia by 7 percent, Texas by 5 percent and New York by 4 percent.

From Q1 2007 and Q1 2011, small businesses dropped their spending on golf by 25 percent, while large businesses cut golf spending by 35 percent.

Lockton: The Law of Health Reform Causes Deep Distress to Employers

A recent survey from insurance broker Lockton revealed that almost 20 percent of employers considered the alternative of abandoning group coverage in 2014.

The “play or pay” mandate of the health reform law, taking effect in 2014, causes employers serious concerns. Roughly 70 percent of the employers interviewed by Lockton said they were either “very concerned” or “concerned” about the impact this law would have on their businesses.

By law, in 2014, most workers will have the possibility to choose from a number of insurance programs subsidized by the federal government, and this will allow employers to become more flexible and to terminate group insurance contracts. According to Lockton’s most recent, survey 18.8 percent on employers planned to do so.

The director of Compliance Services at Lockton, Edward Fensholt, said that the move would not be surprising. He added that the company’s clients have been hinting in this direction for the past few months and that they seemed apprehensive with regards to the provisions of the new law. Furthermore, employers are aware of the fact that the future would bring them increased expenses and work.

The survey is based on the answers of some 40 percent of Lockton’s client-companies. The survey consisted of 10 questions on the health reform. The responses were consistent, revealing a high level of frustration about the fact that the new law will make the administration of health plans even more burdensome from an administrative point of view and more costly than it currently is.

 

GfK: Influential Americans’ Distrust of Corporations Increases

More than three years after the onset of the financial crisis, most Americans find it difficult to trust corporations. A majority of 64 percent of Americans said that corporations will find it increasingly difficult to earn their trust now compared to a few years back.

Furthermore, some 55 percent of Americans said that the situation is not likely to improve in the near future.

The highest level of distrust was noted in the group of influential Americans. This group includes about 10 percent of the American people who are highly involved in activities aimed at changing society. In this group, 74 percent said they found it harder to trust corporations now than they did a few years back, while 61 percent admitted that corporations would find it even harder to gain their trust in the future.

The figures resulted from the latest survey regarding corporate trust, conducted by GfK with the participation of 1,000 Americans. The survey examines the factors that influence the trust of American consumers.

Among the factors that drive down the level of trust, both overall and in the group of influential Americans, are the perceptions that corporate senior and chief executives are being paid too much (77 percent, 71 percent in the group of influential Americans), that corporate management is corrupt (71 percent overall, 70 percent in the influential Americans group), that corporations cover their losses at the expense of their customers (69 percent and 65 percent, respectively), and that an increasing number of products is produced outside the country (62 percent and 61 percent, respectively).

Other reasons for distrust at the top of the list are the lack of stability at management level and the declining quality of services and products.

The results of the survey indicate that Americans retain their suspicion about the corporate world, with only 16 percent of them believing that there will be some improvement in the near future in terms of corporate corruption.

The industry sector considered the most trustworthy by influential Americans is that of tech companies with 70 percent, followed by retail stores, with 67 percent. Overall, the positions are quite different. Other Americans have the highest level of trust in retail stores (71 percent) and manufacturers of packaged foods (65 percent), and manufacturers of personal care products (61 percent), followed by technology companies, with 60 percent.

Colliers International: American Retailers to Expand in the Next 12-18 Months

Improving economic signals, surge in jobs, growing sales and higher demand open the way for the opening of new stores and further development of the US retail sector over the upcoming 12-18 months.

Retailers are actively planning and discussing the opening or construction of new stores, especially in select market sectors, such as discount and value retailers, restaurants and luxury retail. These sectors are also the most likely to expand.

If the positive economic trends continue, keeping gas prices and home prices in check while employment figures post positive developments, retailers could boost consumer sales by 4.5 percent for this year’s winter holiday season. Such growth would signal that the market is growing healthy, returning to its pre-crisis state.

Colliers International also pointed out that the companies are returning to basics by basing their expansion plans on the core performance of their business.

The US Retail director at Colliers International, Mark Keschl, said that some sectors will have a better performance than others. Nonetheless, he added, retailers are planning to expand their business for the first time in several years through either new constructions or leasing space.

Retail vacancies across the US have remained flat since last year, at some 11 percent.

According to Colliers International US chief economist, Ross Moore, the retail sector is stronger than reported, despite the fact that mid-range retail companies have not yet started to feel the effects of economic improvements.

European Businesses Put High Priority on Expansion of Data Centers

A new independent annual survey revealed that European businesses place the utmost importance on expanding their data centers, leading to increased demand of data center space. The survey was commissioned to Campos Research and Analysis by data center provider Digital Realty Trust and it polled 205 UK and European companies.

The survey revealed that more than 80 percent of European businesses planned to increase the infrastructure of their data centers in the coming year. Furthermore, 82 percent of the businesses that participated in the survey indicated that the expansion of data centers would “probably” or “definitely” take place in 2011. About half of the polled European companies planned to expand their data centers in more than two locations.

The results of the survey point towards the strengthening of the market for data centers.

Approximately 73 percent of the companies that intended to expand their data center infrastructure this year plan to operate the expansion in European territory, and the majority preferred their own country. The most popular destination proved to be the UK (37 percent). Other popular locations were France, Germany, the Netherlands and Spain, with percentages of 30, 26 and 21, respectively.

The second largest market for data center expansion, outside Europe, was the US, with 25 percent of the European businesses indicating they were interested in expanding their centers there. The Asia-Pacific region placed third, with 21 percent.

The reasons quoted for expansion were disaster-recovery, improved security and the implementation of a strategy for business consolidation.

The survey was conducted in January and it polled companies with annual incomes of at least 600 million pounds and with more than 2,000 employees. The surveyed companies were located in the Netherlands, Spain, Germany, France, Ireland and UK.

Basketball hoop with adjustable height turns 25

basketball hoopNowadays, a basketball hoop that can be raised or lowered in order to allow people of all heights to play is a common thing. Two decades and a half ago, the adjustable basketball hoop was one of the products that revolutionized the industry of basketball products.

The manufacturer of the basketball hoop with adjustable height, Lifetime Products, celebrates the silver anniversary of their product with giveaways of 25 of their renowned product through 2011. Those who want their own adjustable hoop will be randomly selected to receive one for free on the manufacturer’s website.

Lifetime Products, the company that created the first adjustable hoop in the world, was established in 1986, when it introduced the adjustable basketball pole Quick Adjust. The product was a full system that could be adjusted easily to the needed height in seconds. Since then, the company has evolved to being the largest producer of basketball hoops for family residences worldwide.

The adjustable hoop’s height can be anywhere between 7.5-10 feet, or highly adjustable, depending on which model the clients choose. All models of the product are equipped with various mechanisms for adjusting the height, and they have become a standard in the industry of residential basketball.

Lifetime Products president, Richard Hendrickson, said that the impact of the company’s adjustable basketball hoop on basketball is simply humbling. He added that the innovation brought to customers have turned the game into a fun family activity at home, instead of basketball being the privilege of athletes in gyms and sports courts.

Since its establishment, the company has produced more than 10 million products, which have been sold in 58 countries.