Industry Crib Sheet: Autos Driving Otherwise Stalling Retail Sales

Thomasnet, Automotive, Retail, China, Wind, Energy, Small BusinessRetail sales have risen four straight months but a weak May is a cause for concern among economists looking for a minimum 3 percent bounce-back in GDP growth for the second quarter after a dismal first three months of 2014. According to the Commerce Department’s advanced retail sales report for May, released on June 12, Americans spent just 0.3 percent more on food and goods than they did in April, going after mostly new cars and home-improvement goods.

Consumer spending dominates U.S. economic activity. Economists had forecast Americans to significantly increase their purchases of both durable and non-durable goods following a harsh winter that dragged down retail sales. May sales missed expectations again, although April sales were revised up from a 0.1 percent gain to 0.5 percent. However, sales last month failed to build upon the gains in April.

“We’re not off to the races here, that’s for sure,” Joshua Shapiro, chief U.S. economist at consultancy MFR Inc., told Wall Street Journal.

Last Wednesday, the Federal Reserve announced that it was revising downward its yearly forecast for economic growth from 2.3 percent to 2.1 percent. This number is down even further from the 2.8 to 3 percent growth the Fed forecast in March.

But other analysts, including Paul Dales, senior U.S. economist at Capital Economics, are still anticipating an upward trajectory in consumer spending, reading off the latest employment, factory orders, and manufacturing reports. “We expect it won’t be long before sales start rising more rapidly,” Dales said in a research note, as reported by AP. “Overall, the fundamentals suggest that the U.S. economy remains healthy.”

Auto sales has been a consistent bright spot over the past three months. Compared to the same period a year prior, car sales were up 11.1 percent in May, and sales from March through May accelerated 6.5 percent over the previous three months. Excluding autos, food and retail sales ticked up a mere 0.1 percent last month.

“When your median or average American household needs to buy a new car, they’re a little more careful about what else they do that month,” said Chris Christopher Jr., IHS Global Insight economist. “When they put down that money for the down payment, they won’t be rushing out to a fancy restaurant.”

Cash used to buy cars took away money for other big-ticket items in May, including electronics and home appliances, the sales of which dropped 0.3 percent. Furniture and home furnishing sales rose 0.5 percent, while sales at home improvement stores were up 1.1 percent. Clothing sales shrunk 0.6 percent, while consumer spending at sporting goods, hobby, and book and music shops declined 0.1 percent. Department store sales fell 1.4 percent.

Equipment Leasing, Financing Execs Feel June Swoon

While equipment leasing and financing executives mostly feel the U.S. economy will stay the same in the next six months, they are much less expectant of companies and organizations using financing for capital expenditures.

The June Monthly Confidence Index from the Equipment Leasing & Financing Foundation (MCI-EFI) fell four full points to 61.4, the biggest drop in eight months. It was also the lowest confidence level since December, as the number of lending executives who believe demand for leases and loans to fund capital expenditures will increase over the next four months fell by nearly half, from 34.3 percent to 17.6 percent.

Down from 31.4 percent in May, only 23.5 percent of executives believe business conditions will improve over the next four months, while 5.9 percent of survey respondents believe conditions will worsen. In May, no executives thought conditions will get worse. Nearly 3 percent of executives believe loan and lease demand will decline, as opposed to none who felt this way the month before.

“Generally speaking our new business continues to grow and historic portfolio quality numbers remain low,” said Kenneth Collins, CEO of Susquehanna Commercial Finance, a small-ticket bank lender. “The concern is centered on the uncontrollable factors, including the economy, weather conditions, and instability in various parts of the world.”

Other lenders, including Hitachi Capital America, are looking to be opportunistic and go after core markets as financing demand is expected to slow down. All lenders expect access to capital will either remain the same or improve over the next four months.

And despite their less bullish attitudes, they are looking to ramp up hiring nonetheless: 44 percent of executives expect to hire (versus 40 percent in May); 50 percent expect no change in headcount (down from 51.4 percent the previous month); and 5.9 percent expect fewer employees (down from 8.6 percent).

However, most executives expect to hold the reins on business development activities as expectations fall. A decrease from 45.7 percent in May, 35.3 percent of respondents believe their companies will increase spending.

For more stories like this visit Industry Market Trends 

China to Lead Doubling of Global Wind Power by 2020 

Despite an overall slump in installations in 2013, global cumulative wind power capacity will more than double from 319.6 gigawatts (GW) at the end of 2013 to 678.5 GW by 2020, says research and consulting firm GlobalData.

The company’s “Wind Power, Update 2014″ report states that China, the largest single wind power market responsible for 45 percent of total global annual capacity additions in 2013, is expected to have a cumulative wind capacity of 239.7 GW by 2020. China overtook the United States as the leading market for installations in 2010, when it added a massive 18.9 GW of wind capacity.

“China doubled its cumulative wind capacity every year from 2006 to 2009 and has continued to grow significantly since then,” said Harshavardhan Reddy Nagatham, GlobalData’s analyst covering alternative energy. “Supportive government policies, such as an attractive concessional program and the availability of low-cost financing from banks, have been fundamental to China’s success. While China will continue to be the largest global wind power market through to 2020, growth for the forecast period will be slow due to a large installation base.”

GlobalData’s report also says the United States will remain the second-largest global wind power market in terms of cumulative installed capacity, increasing from 68.9 GW in 2014 to 104.1 GW in 2020. This will largely be driven by renewable energy targets in several states, such as Alaska’s aim to reach 50 percent renewable power generation and Texas’ mandate to achieve 10 GW of renewable capacity, both by 2025.

“The slump in 2013 was largely a product of a decrease in installations in the U.S. and Spain,” Nagatham said, concluding, “While there are likely to be further slight falls in annual capacity additions in 2015 and 2016, overall industry growth will not be affected as global annual capacity additions are expected to exceed 60 GW by 2020.”

Survey Determines Best, Worst States for Small Businesses

Utah, Idaho, Texas, Virginia, and Louisiana are the friendliest states to small businesses, with Colorado Springs, Boise, and Houston being the highest-rated cities, according to’s third annual Small Business Friendliness Survey., a San Francisco-based website that connects consumers to professional services, in conjunction with the Ewing Marion Kauffman Foundation, a Kansas City-based entrepreneurship nonprofit, surveyed 12,632 small businesses across the United States and rated their answers along a dozen metrics including the ease of starting a business, ease of hiring, training and networking, and regulations.

Small business owners gave California, Rhode Island, and Illinois an “F,” while Connecticut and New Jersey earned a “D,” and Sacramento, Providence, and Buffalo were the worst-performing cities, according to the survey. The most-improved state in the survey was Kentucky, going from a “B-” to an “A” grade.’s analysis also concluded that the ability to obtain professional licensing was the most important regulatory issue for small businesses, followed closely by ease of filing taxes. Small business owners also were most concerned about a state’s ease of regulatory compliance — over tax rates — and two-thirds felt they were paying fair amounts of taxes.

In other notable findings, awareness of state government training programs significantly affected small business owners’ views of their states’ friendliness toward small business, raising overall scores by 10 percent, and only 19 percent of respondents are prepared for the Affordable Care Act. created a color-coded, interactive map to present its survey results. It shows each state’s overall friendliness grade as well as its best and worst attribute for small businesses. The map can also be viewed by individual metrics, and 2013 and 2012 results are presented, as well.

This article was originally published on ThomasNet News Industry Market Trends  and is reprinted in its entirety with permission from Thomas Industrial Network.  For more stories like this please visit Industry Market Trends.