RETAIL SALES UP 0.4 PERCENT IN JANUARY

January retail sales grew a solid 3.8 percent unadjusted year-over-year and 0.4 percent seasonally adjusted from an already-strong December, according to calculations released today by the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment.”
Jack Kleinhenz
NRF Chief Economist

“The retail industry started the year on a high note, continuing the momentum from the 2016 holiday season. The healthy monthly gain was driven by January’s strong payroll gains, retail employment gains and business sentiment,” NRF Chief Economist Jack Kleinhenz said.

“We haven’t seen strong January growth in several years, which indicates that consumers are increasing their spending and remain the leading driver of the economy,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors, with the exception of non-store, which was flat in January.

A few specifics from the report include:

  • Online and other non-store sales were flat over the previous month and increased 14.5 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores increased 1 percent seasonally adjusted from the previous month and increased 0.4 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.9 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 1.6 percent seasonally adjusted over the previous month and decreased 1.7 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales were flat over the previous month and decreased 0.3 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 6.6 percent unadjusted year-over-year.
  • Sporting goods stores’ sales increased 1.8 percent seasonally adjusted over the previous month and decreased 3.7 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.7 percent seasonally adjusted over the previous month and increased 9.4 percent unadjusted year-over-year.

ACE Report: NE Ohio job-creation engine sputtered at the end of 2016

by SCOTT SUTTELL
The end of 2016 was not kind to Northeast Ohio’s job market, according to the latest Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted employment in December for the seven-county area of Cleveland and Akron measured by the report was 1,170,985, a decline of 1,879 jobs from 1,172,864 in November. And November was no great shakes, either; its total job number was just 286 higher than the October figure calculated in the ACE Report.

Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model, noted in an analysis of the December data that the seasonally adjusted jobs figure for last month “is below its three-month and six-month average and suggests economic activity and job growth has lost some momentum from the faster pace that was evident in prior months.”
But it’s impossible to draw firm conclusions from one subpar month in one statistical category.

Kleinhenz wrote in his analysis, “We are not sure that the regional economy has made a fundamental change, nor has the national economy, since employment is only one gauge that measures economic activity.” He noted, for instance, that a gauge of economic activity created by the Federal Reserve Bank of Philadelphia rose in Ohio by 2.2% on a year-over-year basis, and recent construction and retail sales data “also show gains.”

Kleinhenz added that “choppy employment” around the end of a calendar year “is not unusual given shifting seasonal hiring patterns. It is typical for the trajectory of monthly employment to be pared significantly back. We expect a similar pattern to take place and recognize that some dampening of the pace of employment gains is projected.”

Kleinhenz wrote in his analysis that regional initial unemployment claims, a factor in the ACE Report model, had been at “historically low levels” but then “kicked up in the middle of December.” Such claims “are usually variable around the holidays because of winter weather, school closures and shifting seasonal hiring patterns,” according to Kleinhenz.

Meanwhile, he wrote, January employment “looks to be a better month based upon a reduction in initial unemployment claims.” Also, he noted that “most measures” of consumer and business sentiment “have shown notable improvement since the November election, raising expectation that economic activity will accelerate at the national and regional levels.”

The national economy “is expected to gain further traction in 2017,” according to Kleinhenz. “Regional growth during 2016 might have been stronger had it not been for weakness in metals production and the energy industry. In addition, the weak global economy and a strong dollar hurt export related firms output and associated employment.”

Despite these developments, he wrote, “the regional outlook (is) promising as national indexes tracking production and new orders in the most recent ISM (Institute for Supply Management) survey rose to levels posted in late-2014.”

Month Non-Farm Small(1-49) Mid-Sized Goods Service
(50+) Producing Producing
June 2016 (act) 1,167,272 475,237 692,035 211,159 956,113
July (est) 1,175,080 478,077 697,003 217,432 957,648
Aug (est) 1,171,211 476,665 694,546 214,391 956,821
Sept (est) 1,169,702 476,139 693,563 212,852 956,851
Oct (est) 1,172,614 477,287 695,327 213,914 958,700
Nov (est) 1,172,864 477,358 695,506 214,400 958,463
Dec (est) 1,170,985 476,588 694,397 214,137 956,848

Recent Month’s Estimated Change
Nov ’16 to Dec ’16 (1,879) (770.15) (1,108) (264) (1,615)
Diff from Dec 2015 1,757 883 874 (2,085) 3,842

Trend
3-month 1,172,154 477,078 695,077 214,150 958,004
6-month 1,172,076 477,019 695,057 214,521 957,555

ACE Report: Northeast Ohio posts small employment gain in November

Northeast Ohio eked out a small employment gain in November, according to the latest Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted employment in November for the seven-county area of Cleveland and Akron measured by the report was 1,172,672, a gain of just 286 jobs from 1,172,386 in October.

The change is small, but Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model noted it was unusual in this respect: The region lost 152 service jobs from October to November, but it added 438 jobs in goods-producing fields.

“The offset is a turnaround from recent trends where the growth in service jobs offset losses in manufacturing,” Kleinhenz wrote in an analysis of the November ACE Report data.

The region remains in positive jobs territory from a year ago. Kleinhenz said November employment in Northeast Ohio was up by 4,570 jobs from the like month of 2015.

November’s jobs figure also is above the ACE Report’s seasonally adjusted three- and six-month averages, which “suggests economic activity and job growth has picked up some momentum from the slower pace of job growth the region experienced in the second quarter,” according to Kleinhenz.

Underlying November’s ACE Report  figures are some positive regional and national trends.

For instance, Kleinhenz wrote in his analysis that  unemployment claims for the region “decreased by 22% over the same month a year ago. Coincidental measures for Ohio are up 2.2%, and  construction put in place and retail sales show gains in the last three months.”

National indicators show an economy that is picking up the pace.

U.S. Gross Domestic Product was revised higher to 3.2% for the third quarter, which Kleinhenz wrote is a “significant number relative to the average 2.2% growth we have seen  in this expansion.”

The Institute for Supply Management’s manufacturing index in November posted a reading of 53.2, which ties the fastest pace of this  manufacturing sector indicator over the past 18 months, according to Kleinhenz. (A reading above 50 indicates the sector is expanding.)

He also noted that the Federal Reserve’s Labor Market Conditions Index, a broader measure of the health of the labor market than provided by any single report, “indicates that the labor market is continuing its path of improvement.”

The Fed’s labor index increased by 1.5 points in November, about the same level of improvement as in October.

“All in all, these national trends should be a good indicator of what to expect at the state and regional levels,” Kleinhenz concluded.

Seaonally adjusted data

Month Non-Farm  Small (1-49)  Mid-Sized (50+) Goods-producing Service Producing
June 2016 (act) 1,167,272   475,237   692,035 211,159 956,113
July (est) 1,175,087   478,079   697,008 217,449 957,638
Aug (est) 1,171,162   476,645   694,518 214,389 956,773
Sept (est) 1,169,567   476,086   693,480 212,792 956,775
Oct (est) 1,172,386   477,203   695,183 213,748 958,638
Nov (est) 1,172,672   477,293   695,380 214,186 958,486
Recent Month’s Estimated Change
Oct ’16 to Nov ’16 286   89.50   197 438 (152)
Diff from Nov 2015 4,570   2,016   2,554 (1,403) 5,973
Trend
3-month 1,171,542   476,861   694,681 213,575 957,966
6-month 1,171,358   476,757   694,601 213,954 957,404

Retail Sales See Solid Gains in First Half of Holiday Season

November retail sales grew a solid 5 percent year over year and 0.1 percent from an already-strong October as consumers found the deals they were hoping for both online and in stores and showed their purchasing power during the first half of the holiday season, according to calculations released today by the National Retail Federation. Online and other non-store sales grew 15.3 percent year over year, reflecting the growth of online shopping. The numbers exclude automobiles, gasoline stations and restaurants.

“Consumers were able to take advantage of low prices throughout the first half of the holiday season, checking out with full baskets but paying less even though purchasing was up,” NRF Chief Economist Jack Kleinhenz said. “The combination of job and wage gains led to solid holiday spending by American households.”

“Consumers have the wherewithal to spend but households remain measured and rational, which is no surprise given their history since the recovery began in 2009,” Kleinhenz said.

There were broad-based monthly increases across the majority of sectors with the exception of sporting goods.

November’s results indicate that retail sales for the holiday season will meet or exceed NRF’s holiday sales forecast, which anticipates an increase of 3.6 percent over last year’s level for November and December. For a look into the art of forecasting, read Kleinhenz’s article: The Art and Science of Economic Forecasting.

A few specifics from the report include:

  • Online and other non-store sales increased 0.1 percent seasonally adjusted over the previous month and increased 15.3 percent unadjusted year-over-year.
  • Sales at clothing and accessories stores were flat from the previous month and increased 1.9 percent unadjusted year-over-year.
  • Sales at general merchandise stores increased 0.1 percent seasonally adjusted over the previous month and decreased 1.4 percent year-over-year.
  • Electronics and appliances stores’ sales increased 0.1 percent seasonally adjusted over the previous month and decreased 2.5 percent unadjusted year-over-year.
  • Furniture and home furnishings stores’ sales decreased 0.7 percent seasonally adjusted over the previous month and decreased 7.2 percent unadjusted year-over-year.
  • Sales at building materials and supplies stores increased 0.3 percent seasonally adjusted over the previous month and increased 7.5 percent unadjusted year-over-year.
  • Sporting goods stores’ sales decreased 1 percent seasonally adjusted over the previous month and increased 1.6 percent unadjusted year-over-year.
  • Sales at health and personal care stores increased 0.1 percent seasonally adjusted over the previous month and increased 7.7 percent unadjusted year-over-year.

More people shopped over Thanksgiving weekend than last year — but they spent less

About 154 million shoppers made purchases at stores or on e-commerce sites this holiday weekend, the National Retail Federation reported Sunday, a bump up from the 151 million people who last year participated in the annual barrage of Black Friday deals.

And though it is encouraging for the retail industry that more consumers opened their wallets this time around, it wasn’t all good news: Average spending per person was down to $289.19 from $299.60 in 2015.

Matt Shay, the chief executive of the National Retail Federation (NRF), attributed the decline in spending to just how deep and broad the discounts were over the four-day weekend. While the promotions offered during this period were probably preplanned and thus baked into the retailers’ sales plans, it could prove a troublesome dynamic for them if ultra-deep discounts end up being needed all season long to get people shopping.

But other factors could have contributed to the decline in per-person spending: Retailers have been spreading their Black Friday deals out over a longer stretch, so it’s possible that many people pounced on offers several days before Thanksgiving even arrived. And NRF’s survey found that about 122 million people plan to shop on Cyber Monday, up from 121 million last year. So perhaps some consumers are holding out for the fresh batch of deals that will arrive after the weekend comes to an end.

The survey results reflect the increasing importance of e-commerce in the retail landscape. This year, about 108.5 million people shopped online over the holiday season, compared with 103 million last year. Meanwhile, the number of people who shopped in stores fell to 99.1 million from 101 million last year.

Indeed, other data released this weekend offers evidence that online spending was strong on Thanksgiving and Black Friday. Adobe, which analyzed 22.6 billion visits to retail websites, reports that a record $3.34 billion was spent online on Black Friday, up 21.6 percent from the previous year. Sales on Thanksgiving Day were up 11.5 percent to $1.93 billion.

Adobe’s research found that top-selling items included iPads, Samsung 4K televisions and toys such as Lego Creator sets and the Barbie Dreamhouse.

The NRF had earlier projected that the retail industry would see a 3.6 percent increase in sales this holiday season over last year. That would be significantly better than the 3 percent growth registered in 2015. The trade group’s chief economist, Jack Kleinhenz, said Sunday that he believes that prediction “holds up pretty well” right now, even as some have asked whether the surprising election results might have altered consumers’ mind-set.

Experts say that in a presidential campaign year, we typically see that the election serves as a temporary distraction, with shoppers getting their gift-buying started a little later than they might otherwise. NRF’s survey seems to reflect that dynamic: About 23 percent of respondents said they hadn’t started their holiday shopping yet, compared with 19 percent last year. And a smaller share of people have finished their holiday shopping. This year, just 9 percent of shoppers have done so, compared with 11 percent last year.

 

November 27 at 3:53 PM

The Washington Post

Photo:Byron Siekavizza wheels his television to his car as he gets a jump-start on shopping for deals at Best Buy on Thanksgiving in Alexandria. (Nikki Kahn/The Washington Post)

ACE Report: Service sector sparks October jobs gain

The region reversed two months of job declines in October, adding 2,498 jobs, according to the Ahola Crain’s Employment (ACE) Report.

Seasonally adjusted, the region saw employment rise to 1,171,849 from 1,169,351 a month earlier, a 0.2% increase.

While the service-producing sector shows a year-over-year gain of 5,407 jobs, the goods-producing sector declined by 2,181 jobs. Smoothing out the month-to-month figures, on a year-over-year basis, the seven-county workforce increased 3,226 jobs, a gain of 0.3%, since October 2015.

The regional decline in the goods-producing sector echoes the national pattern. The United States lost 9,000 manufacturing jobs in October, according to the Bureau of Labor Statistics.

“Service employment has been growing, but manufacturing payrolls are either sluggish or declining,” reported Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The factory sector continues to face stiff headwinds, including weak global demand due to sluggish growth abroad, a strong dollar and low commodity prices.

Longer term, employment in the goods-producing sector peaked in July 1979 at 25,163,000. Since then, sector employment has declined by 5,548,000 — or 22% — to its current level of 19,615,000. Those jobs have been lost largely to automation and shop-floor tracking systems that increase efficiency and, to a lesser degree, to globalization.

A bright spot at the national level, Kleinhenz said, is the 0.4% gain in average hourly earnings, up 2.8% over the past year.

Economists at Pittsburgh-based PNC Financial Services Group called that growth in average hourly earnings the fastest increase in seven years.

“As the job market gets tighter, firms are responding to tougher competition for workers by raising pay,” the financial services firm said in its Nov. 4 economic report. “This is very good news for incomes and consumer spending.”

The Federal Reserve Board’s most recent Beige Book, which gathers anecdotal information on each region of the country, said of the Cleveland region, “Wage pressures were most evident in the construction and retail sectors across skill levels. Reports from staffing firms about job openings and placements were mixed, though all contacts noted an increase in the number of temporary positions.”

Seaonally adjusted data

Custom-Chart-1
Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16(actual) 1,175,919   478,541   697,378 215,829 960,090
April (est) 1,169,858   476,032   693,826 215,323 954,536
May (est) 1,174,111   477,748   696,363 216,312 957,799
Jun (est) 1,172,025   476,883   695,141 216,156 955,869
Jul (est) 1,175,213   478,117   697,096 217,662 957,551
Aug (est) 1,171,067   476,593   694,474 214,553 956,515
Sept (est) 1,169,351   475,985   693,367 212,954 956,398
Oct (est) 1,171,849   476,981   694,868 213,697 958,152

ACE Report: Jobs drop in September, but outlook is optimistic

For the second straight month, Northeast Ohio registered a decline in the size of its payrolls, as calculated in the Ahola Crain’s Employment (ACE) Report.

In September, seasonally adjusted employment decreased by 1,657 jobs, to 1,172,402 last month from 1,174,059 in August, according to the ACE Report data. That followed a decrease of more than 3,600 jobs from July to August.

Both goods-producing and service-producing companies in Northeast Ohio shed jobs in September, the ACE Report found. Payrolls related to goods production fell by 1,539, and service-related regional payrolls fell 118.

September’s payroll number of 1,172,402 was below the region’s three-month (1,174,728) and six-month (1,174,286) averages, according to the ACE Report data.

However, Jack Kleinhenz, the Cleveland Heights economist who created the ACE Report model, noted that employment in Northeast Ohio “continues to remain in positive territory for the year, as there were 6,012 more jobs in the seven-county Cleveland/Akron region than the (like) month a year ago.”

Kleinhenz said in an analysis of the most recent data that there are “a lot of moving parts impacting Northeast Ohio economic activity, including seasonal forces in August and September, thus making it difficult to infer that slower growth is ahead.”

He noted that while employment measures “are important, they leave out other key information (that is) included in other economic series.”

For instance, Kleinhenz said he keeps a close eye on a “coincident economic index” produced for each state by the Federal Reserve Bank of Philadelphia. The index includes four factors: employment; average hours worked in manufacturing by production workers; the unemployment rate; and wage and salaries incorporating employment.

In August, he said, the coincident index for Ohio increased 0.3%, and it has risen by 3.4% over the past 12 months. These “are favorable figures when compared to the nation’s 0.24% and 3%, respectively,” Kleinhenz said.

He also found reason for optimism in the results of the Institute for Supply Management’s nonmanufacturing index. That index “rebounded strongly in September to 57.1 from 51.4 in August, well above market expectations and its highest reading since October 2015,” Kleinhenz said.

Meanwhile, he said, the ISM manufacturing index rose to 51.5 from 49.4, which “suggests a modest pickup in business activity in September.”

Kleinhenz concluded, “The improvement as measured by these indexes, though a bit uneven, holds out hope that a pickup in economic activity is underway for the remainder of 2017 and should provide the basis for future payroll gains for the Northeast Ohio region.”

Custom-Chart-1

Seaonally adjusted data

Month Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Mar-16(actual) 1,175,919   478,541   697,378 215,829 960,090
April (est) 1,171,228   476,564   694,664 215,938 955,290
May (est) 1,175,950   478,462   697,489 217,154 958,796
Jun (est) 1,174,351   477,788   696,562 217,180 957,170
Jul (est) 1,177,724   479,087   698,637 218,863 958,861
Aug (est) 1,174,059   477,748   696,311 216,000 958,059
Sept (est) 1,172,402   477,160   695,242 214,460 957,941

Recent Month’s Estimated Change

Date Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
Aug ’16 to Sept ’16 (1,657)   (588)   (1,069) (1,539) (118)
Diff from Sept 2015 6,012   2,592   3,420 (980) 6,992

Trend

Date Non-Farm Small (1-49) Mid-Sized (50+) Goods-producing Service Producing
3-month 1,174,728   477,998   696,730 216,441 958,287
6-month 1,174,286   477,802   696,484 216,599 957,686

Holiday sales to rise 3.6 percent this winter: NRF

A more confident group of consumers are expected to loosen their purse strings this holiday, and are seen sparking an acceleration in retail sales growth over last year.

The National Retail Federation on Tuesday said it expects retail sales excluding automobiles, gasoline and restaurants to rise 3.6 percent in November and December, to $655.8 billion. That would mark an acceleration over last year’s 3 percent increase, and would easily top the 10-year average of 2.5 percent growth.

The trade organization’s forecast, considered the industry benchmark, is based on an economic model that factors in consumer credit, monthly retail sales and personal income.

NRF anticipates non-store sales, which skew toward digital, will increase between 7 percent and 10 percent, to as much as $117 billion.

“We have a lot more people working this year,” Jack Kleinhenz, NRF’s chief economist, told reporters.

When factoring in other indicators like wage growth and higher home prices, “our general sense of the economy is that we’re in better shape than we were last year,” Kleinhenz said.

Source: NRF

Retailers got off to a rocky start in 2016, as last winter’s unseasonably warm temperatures left their shelves stocked with coats and scarves. Stores were forced to aggressively discount these items to make way for spring goods, cutting into their margins. Retailers have finally gotten their inventory levels in check, boding well for their profitability this season.

Yet even as more Americans are working and receiving slightly higher paychecks, they’ve been reluctant to spend on traditional retail goods — namely apparel. Broad-based discounting has also cut into retailers’ top lines, requiring them to sell more items to record a gain.

And weather once again took a toll on sales in August and September, thanks to a warm back-to-school and early fall selling season. High temperatures dented apparel specialty stores’ revenue by $393 million during those two months as compared with the prior year, according to new research by Planalytics.

More broadly speaking, data from the Commerce Department shows that retail sales in August slipped on a monthly basis for the first time since March.

Despite the slowdown, Planalytics predicts temperatures on the densely populated East Coast will be more in line with typical years this holiday, which should help spur demand for cold-weather categories. And while some holiday purchases may be pushed back because of the election, the trade organization said it does not anticipate political uncertainty to dent sales.

“This year has not been perfect,” NRF President Matthew Shay conceded. “Overall we think this is a realistic number and very reflective of the current environment.”

Like NRF, separate forecasts from Deloitte, AlixPartners, the International Council of Shopping Centers and RetailNext are all calling for growth between 3.2 percent and 4 percent. PwC expects a more robust 10 percent lift in spending; unlike the other predictions, its forecast includes spending on restaurants and travel.

Retail sales excluding automobiles and parts rose 2.8 percent through August, according to the Commerce Department.

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CNBC

Forecast: Holiday Sales to Increase 3.6 Percent

The first forecasts for the upcoming 2016 holiday season have been released, and they predict that retailers will enjoy solid sales during the crucial season which can comprise more than 20 percent of a retailer’s annual business, according to the National Retail Federation, the Washington D.C. retail trade organization.

Retail sales during November and December, excluding auto, gas and restaurant sales, will increase 3.6 percent to $655.8 billion, according to the NRF, which released its forecast on Oct. 4. Deloitte, the auditing, consulting and risk management company, forecast that holiday retail sales will increase 3.6 percent to 4 percent, according to a statement released Sept. 21. Retail sales should exceed $1 trillion during the season, said Daniel Bachman, Deloitte’s senior U.S. economist.

“Consumers have ramped up their spending this year on the back of a strong labor market. We also expect slightly higher growth in disposable personal income during the upcoming holiday season compared with last year,” he said.

During a conference call, Jack Kleinhenz, the NRF’s chief economist, also noted that economic indicators support predictions that sales will increase during the holiday despite gloom about the economy. “Certainly there will be some speed bumps that come along,” he said.

But with unemployment low—it is 4.9 percent, according to the Bureau of Labor Statistics—and consumer confidence increasing—it is at the highest level since the recession, according to a Sept. 27 statement from The Conference Board—things look good for the U.S. consumer.

“They have more money in their pockets, but they haven’t over-leveraged themselves,” Kleinhenz said.

Kleinhenz also is confident that the economy is in a much stronger position than it was last year when the NRF missed its holiday forecast.

“It would be a different picture if we had higher unemployment. We’ve been adding jobs, we aren’t at a break-out speed, but I don’t see where people are going to fall off of the side of the world and stop spending,” he said.

Last year, the NRF predicted that holiday retail sales would increase 3.7 percent. By the time the season’s last receipts were counted, the NRF announced that 2015 holiday sales had only increased 3 percent. Matthew Shay, the NRF’s president and chief executive officer, blamed the missed forecast on warm weather during the holiday season, inventory issues and retailers offering deep discounts early in the season.

The NRF also forecast sales increases for e-commerce and catalogs during the 2016 holiday season. It is forecast to increase between 7 percent and 10 percent to as much as $117 billion. Deloitte also predicted a robust forecast for holiday e-commerce sales, saying online sales will increase 17 percent to 19 percent, reaching $96 to $98 billion during the 2016 holiday season.

By Andrew Asch | Tuesday, October 4, 2016