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.

 

USCM: Pre-Crisis Job Levels Hard to Reach in Metro Areas

The conference of US mayors, USCM, revealed that metropolitan mayors expect to see double digit joblessness in 75 metro areas before year-end and 27 areas dropping to single digit unemployment. The USCM also projected a growth of the gross domestic product of 3.5 percent for the rest of this year, up from 1.9 percent in the first half.

Employment levels like those before the economic downturn will be slow to emerge, reveals a USCM report. However, USCM estimates that, by the end of 2014, many of the metropolitan areas will see employment bloom, with half of the 363 metro areas reaching pre-crisis levels of employment. Forty-eight areas are forecast to remain behind in employment levels and to reach their pre-crisis employment peak only after 2020.

The USCM annual meeting brought together the mayors in US to discuss the challenges that their cities face in the current economic climate. Given some of the less optimistic outlooks, the USCM participants launched a call to the White House and the Congress to intensify their efforts to stimulate the economy. Among other things, they called for an end of the wars in Iraq and Afghanistan. They also asked that military spending be directed towards stimulation of the national economy and domestic jobs.

Metropolitan areas are expected to generate 86.4 percent of payroll additions by the end of 2015. Unemployment predictions are not very optimistic, with 69 metros at more than 10 percent, 100 with at least 9 percent, 173 with 8 percent by the end of next year.

The Conference Board: LEI for US increases in May

The Leading Economic Index issued by The Conference Board for the US increased in May to 114.7, up 0.8 percent, after a slight decline of 0.4 percent in the previous month and an increase of 0.7 percent in March.

The most important contributions to the index were brought on by housing permits, consumer expectations and the spread of interest rates.

According to The Conference Board economist Ataman Ozyildirim, the LEI for US recovered in May, and it resumed its positive trend, which was interrupted shortly by the April decline, as most of the index’s components supported its growth. The expert added that the indexes’ evolution continued to point towards upcoming economic growth.

Another Conference Board economist, Ken Goldstein, underscored the fact that economic growth is hampered by some strong trends, such as a soft housing market and high food and gas prices. He added that, while the economy will continue its growth, indicators point to slow advancement over the summer and fall.

The index measuring the current economic factors, the Coincident Economic Index, also increased, continuing its previous trend by increasing slowly but constantly. In May, the Coincident Economic Index increased to 102.9, up 0.1 percent, following increases in April and March of 0.1 and 0.2 percent, respectively.

The US Leading Economic Index account for manufacturing weekly hours, weekly initial jobless claims, new orders, materials and consumer goods, vendor performance and supplier deliveries index, new orders from manufacturers for capital nondefense goods, building permits for housing units, the prices for the top 500 common stocks, interest rates, consumer expectations and money supply.

 

Conference Board: April Ended with Positive Evolution in the LEI for China

The Leading Economic Index issued by the Conference Board for China posted a value of 154.5 in April, representing a 0.2 percent increase compared to March.

The growth was slower than in March, when the LEI for China advanced by 0.9 percent, but the evolution is still above the February performance, when the index decline 0.1 percent.

According to resident economist for the China region at The Conference Board, Bill Adams, the evolution of the China index is in line with the slower economic activity in the months to follow. Despite weak production indicators and consumer expectations, the LEI for China increased in the first months of the year, driven by an expansion of construction activity and in credit.

A less optimistic economic climate in Europe and the US has also impacted on the Chinese export sector.

The Conference Board index that measures China’s current economic activity – the Coincident Economic Index – had a better performance in April than the LEI, posting growth of 1.3 percent, to 201.8, following increases of 1.3 and 0.6 percent in March and February, respectively.

The contribution of all six elements of the index was positive, and each indicator was accurate. The LEI aggregates six separate indicators allowing noise to be filtered out in order to reflect the economic trends with more accuracy.

The China Leading Economic Index was first issued in 2010 and applied to the Chinese economy backwards to 1986. The index managed to represent the key points in the Chinese economy and the economic cycles.

The Conference Board also produces Leading Economic Indices for the US, UK, Spain, Mexico, Korea, Japan, Germany, France, Australia and the Euro Area.

 

Deloitte: Outlook on Consumer Spending Less Optimistic and Index Continues to Slip

As inflation and unemployment claims continue to rise, the consumer spending outlook gets weaker. The Consumer Spending Index from Deloitte continued its decline in May, driven down by a sharp increase of jobless claims last month.

The monthly index for May fell by 2.66 percent while only a month ago it was revised upward for an increase of 3.29 percent.

The consumer spending index tracks the evolution of the consumers’ cash flow, which is an indicator of future spending.

According to the chief economist of Deloitte, Carl Steidtmann, the Index’s author, the main causes for the weakness in consumer spending are the job market indicators. He added that the economy will also have to face other challenges, which will keep the economic growth low for the short term.

Consumer spending is under pressure from negative effects on real wages caused by rising energy and food prices, combined with labor market insecurities.

The index is comprised of four elements – real home prices, real wages, initial unemployment claims, and the tax burden.

The tax burden went up to 10.5 percent, from 9.1 percent last year, while the initial number of jobless claims increased by 32,500. The labor market is showing signs of decline, and its recovery is put at risk. The growth of real wages contracted by approximately 0.8 percent compared to the same period last year. Real wages continue to suffer the effects of growing food and energy prices.

Real prices of homes have continued to decline, but at a slower pace than previously reported. Compared to last year, the prices are 3.3 percent lower.

 

US April Exports Up Nearly 16 Percent, Reach New Historic High

United States exports posted a new record, increasing by nearly 16 percent in April, from 172.7 billion dollars to 175.6 billion dollars, reveals the US Commerce Department through its Bureau of Economic Analysis.

Official figures show that the export of goods increased by two billion dollars, to 126.4 billion, while exports of services reached 49.1 billion dollars, after an increase of 0.2 billion dollars. The Bureau of Economic analysis also reported that the country’s trade deficit went down by 3.1 billion dollars, from 46.8 billion to 43.7 billion.

Export growth has received financial support from the US Export-Import Bank, which authorized some 14.8 billion dollars for the first seven months of the current fiscal year. Ex-Im Bank reported that guarantees for long-term loans have increased by nearly 34 percent for this fiscal year, reaching 7.6 billion dollars, while guarantees for the medium-term loans reached 612 million dollars, an increase of 27 percent. Guarantees for working capital, generally used by small businesses, also increased by nearly 12 percent this year and reached 834 million dollars.

For the past 12 months, US exports amounted to 1.935 trillion dollars, up 22.9 percent compared to the 2009 levels.

The annualized growth rate over the last 12 months was 16.7 percent. The current export policy of the US targets the doubling of exports by 2014. The required annualized growth rate for achieving this objective was estimated at 15 percent.

The market with the largest annual growth was Turkey, with an increase of 54.9 percent. Other markets that have posted annual growth rates of more than 30 percent are Indonesia, Hong Kong, Malaysia, Argentina, Brazil, Peru, Taiwan, Panama and South Africa (nearly 40 percent).

SFN Group: Confidence Index for US Employees Posts Slight Increase in May

Harris Poll LogoWorkers appear to have increased confidence in their ability to find new jobs, as well as in the economic prospects of the country.

The Employee Confidence Index, issued by the SFN Group, posted a 0.5 points increase in May, to 53.9. The index measures the optimism workers manifest towards the country’s economic climate and the confidence employees have in their employment situation.

The current situation of the index reveals a positive trend in the confidence that workers have about the possibility to find new jobs and the economic strength of the country. Approximately 40 percent of the workers that participated in a survey by Harris Interactive said that they were considering a job transition sometime in the next 12 months.

The number of workers with increased confidence in the strength of the economy has increased in May to 28 percent, from 25 percent in April, while 51 percent still believe that the number of jobs has lowered. More than 60 percent of workers said they believed in the future prospects of their employer while 46 percent said they were confident in being able to find new work. Furthermore, 72 percent of the surveyed workers did not believe that they would lose their job in the following 12 months.

According to SFN Group’s president and CEO, Roy Krause, the index has showed improvements in employee confidence over the past months, together with increasing employer confidence. He added that, despite these positive trends, there was some inconsistency in economic recovery rates. SFN Group continues to warn employers that their workers might try to change jobs, despite some economic volatility and that they should strengthen their efforts to retain workers who choose to seek other workplaces.

The SFN findings are supported by a survey made by Harris Interactive, conducted with the participation of 1,268 employed adults from US.

February Shows Lower Trade Deficit for US

us tradeAmerican trade deficit lowered in February to 45.8 billion dollars from January’s revised figures of 47 billion dollars, announced the US Commerce Department’s Bureau of Economic Analysis.

The drop of the deficit is owed mostly to a higher decrease of imports compared to exports. February imports amounted to 210.9 billion dollars, reported the Bureau. In February, the US exports fell slightly, to 165.1 billion dollars, from 167.1 billion dollars in January. February also witnessed a record surplus in services exports, of 13.6 billion dollars.

January exports topped the record in exports posted in July 2008, of 165.7 billion dollars, according to the Bureau of Economic Analysis.

The year-on-year export figures for February were of 1.88 trillion dollars, 19.5 percent higher than exports over the same period ending in February 2009. The annual growth rate for the year ending on February 28, 2011 was of 16.5 percent compared to 2009 figures. This rate of annual export growth sends positive signals to the economy, as it is above the level of 15 percent required to double US exports until the end of 2014.

The markets for US exports are defined by the characteristic of having minimum imports of services and goods from the US of six billion dollars.

By this standard, the largest importers of US goods and services, thus the highest export markets, are Egypt and Korea, with some 31 percent, Malaysia and Argentina – in excess of 32 percent, Brazil with 34.5 percent, Peru with 35.4 percent, Taiwan and Panama – more than 36 percent of total imports being from US, and South Africa with 37.6 percent. The largest importer of US-made goods and services was Turkey, which had a ratio of 53.8 percent of its total import from the US.

 

Six-month Straight Increase for the Employment Trends Index from The Conference Board

employmentThe Employment Trends Index, published by research organization The Conference Board based data released by the US Bureau of Labor Statistics, revealed growth in US employment for the sixth consecutive month. The March index is 100.9 from the 100.3 value in February.

The index shows a year-on-year increase of eight percent.

According to Macroeconomic Research associate director Gad Levanon, the index started to show a trend of accelerated growth of employment late in 2011. Despite the fact that some sectors are still lagging, employment in most sectors has seen the fastest growth ever over a period of six months. The lagging sectors are local and federal government and construction, and they are not expected to see a positive turn anytime soon.

The Conference Board does not foresee a significant speeding of economic growth, which is why the research organization estimates that, over the next few quarters, employment growth will keep to its current growth rhythm for the remaining period of this year.

The index is based on eight indicators from the labor market. The recent growth is owed to the positive developments registered by five of the indicators, namely the number of unemployment insurance claims, temporary workers, trade sales and manufacturing, industrial production and job openings.

The Employment Trends Index is published every month in the first Monday after the Bureau of Labor Statistics releases its report on employment in the US.

The Conference Board is a nonprofit and non-advocacy global association for research that provides analyses aimed at assisting decision-makers to improve their performance by providing practical and actionable information.

Mexico and US Reach Agreement on Trade With Dairy Products

Mexico and US agreementA two-year long dispute between U.S. and Mexican traders was resolved yesterday in an agreement announced by Mexican President Felipe Calderon and U.S. President Barack Obama. The said dispute caused Mexico to charge tariffs on exports from the U.S. A fact sheet from the White House which details the agreement states that 50 percent of the tariff rate will be eliminated at the start of the agreement upon signing while the remaining percentage would follow as soon as the first Mexican carrier would be given authority to operate within the program.

The tariffs started in March 2009 as the U.S. was unable to comply with the North American Free Trade Agreement (NAFTA) duty of allowing trucks from Mexico to cross the United States boarder. Safety concerns were their reason for noncompliance. Tariffs were expanded in August 2010 to include dairy products such as cheese. Over the last 10 years, U.S. dairy product export to Mexico covered by the NAFTA has risen steadily making it the biggest export market in the industry. Dairy products worth 837 million dollars from the US were imported by Mexico in 2010 alone. However, due to the dispute, market shares were put in jeopardy leaving buyers to find other sources for their needed cheeses.

The International Dairy Foods Association (IDFA), who represents the dairy manufacturers, marketers and suppliers of the country, started negotiations with Mexican officials in 2010 in an attempt to slash the tariff rate to 25 percent from the initial plan of 125 percent .They advocated and continue to advocate for the cancelling of tariffs involving dairy export. IDFA senior group vice president Clay Hough extended his gratitude to the Mexican and U.S. governments for pushing forth with the agreement to end the tariffs. He adds that for the terms and endeavors to be fully attained, the administration and the Congress should work together.