ECONOMIC INDICATORS – THE LATEST UPDATES
According to the December 10, 2010 edition of Boating News Net, provided by NMMA, the GDP grew 2.5% in the third quarter due primarily to consumer spending on gas, used motor vehicles, exports, and state and local government spending. Light vehicle sales ebbed to 873,000 in November, up 17% from a year ago. Year-to-date, total sales are up 11% from a year ago. The seasonally adjusted annual rate was unchanged at 12.3 million.
During this same time, private businesses inventories increased substantially, climbing to $112 billion (Q2: $69 billion), growth in imports moderated to 17% (Q2: 34%), and consumer spending on services alone rose 2.5% (Q2: 1.6%). The Fed’s long-term GDP forecast remains at 2.5% to 2.8%.
On a positive front, consumer confidence hit a five-month high of 54.1 in November, beating expectations of 53.0. Consumers’ short-term outlooks also improved to 74.2, representing the largest gain in six months. Assessments of current conditions were relatively unchanged at 24, up from 23.5 the prior month.
Consumers also were more confident about future job prospects and income.
CEO confidence ebbed to 50 in the third quarter, from 62. More CEOs reported increasing capital spending plans, citing increases in sales volumes, while fewer CEOs reported cutbacks.
Unemployment rate increased to 9.8% in November, after holding steady at 9.6% for the previous three months. Payrolls gained 39,000 in November, following a gain of 172,000 in October. However, for the first time in more than four years, private sector job growth totaled more than 100,000 for four consecutive months, July through October. Since January, 2010, the private sector has added 1.2 million jobs.
For the fourth consecutive month, retail sales grew $4.5 billion in October to $373 billion, the biggest gain in seven months, nearly doubling expectations, and primarily reflecting a $3.2 billion surge in auto sales.
Growth in the Purchasing Managers Index was relatively unchanged in November, down 0.3 points to 56.6, the second highest reading in the last six months. New orders, production, and employment posted continued to grow, although at a slower rate, while inventories accelerated. Backlog of orders was unchanged. A reading greater than 50 indicates the manufacturing economy is generally expanding. October marks the 16th consecutive month of expansion in manufacturing.
During its November meeting, the Federal Open Market Committee decided to keep the target range for the Federal Funds rate between zero and 0.25% and restated that the rates will likely be kept at this level “for an extended period.” The Federal Funds rate has been near 0% since December 2008. In addition, the Fed plans to purchase another $600B of longer-term Treasury securities by Q2 2011. The effect of these purchases would be equivalent to cutting short-term interest rates by 0.75 points.
In October, existing U.S. single-family home sales fell 2% to 3.9 million, new housing starts declined 12% to 519,000, and new home sales decelerated to 283,000, down 8% from the previous month.
Since January 2010, wholesale shipments of traditional powerboats have been trending steadily upward, compared to record lows a year ago. Through August YTD, wholesale volumes were up 35% and dollars up 40%. Advance data indicates units will be up 34% through the third quarter while dollars will be up 38% for NMMA’s control group of manufacturers.
The rate of decline in new powerboat registrations moderated to -8.4% in the second quarter compared to a year ago. New powerboat registrations totaled 108,000 for the first half of the year and totaled 187,000 for the rolling 12 months through the second quarter. On a rolling 12-month basis, new powerboat registrations were down 4.4% from the previous quarter. Advance estimates indicate sales will be down 15% on a rolling 12-month basis through July.
Recreational boat and marine engine export volumes were up 21% through the third quarter of 2010, while dollars were up 29% from a year ago. Corresponding import volumes were up 47%; dollars were up 30%.
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NMBA SEES LOAN MARKET STABILIZING
Participants at the recent National Marine Bankers Association conference expressed confidence that stability is working its way back into the boat loan sector. About 100 people took part in the 31st annual event, which ran Nov. 7-9 in San Diego.
"The number of marine funding institutions, including major national banks, has settled in around a half-dozen, reflecting what's found in the broad financial market," association President Karen Trostle of Sterling Acceptance Corp., wrote in a statement.
"Financial service firms, which act as agents for the funders, have seen some attrition in the past year, but still serve most active boating markets across the U.S.," she added. "Our conference had continued steady support from remarketers, maritime attorneys, surveyors and others who are helping resolve the inventory overhang and overbought market conditions. And we see some hopeful signs of new boat loan and refinance activity, especially resulting from the fall boat shows."
Trostle shared the results of a recent anecdotal "how's business" survey comparing this year's fall boat show season with last year's season. A roughly equal mix of 50 dealers and manufacturers and financial servicers/banks were contacted.
New Boat Sales:
- Northeast: up 25 percent
- Mid-Atlantic: up 30 percent
- Southern California: no change
- Northwest: up 10 percent
- Southeast: up 10 percent
- Refinances up 22 percent overall
- Used boat sales: up 35 percent
- Retail sales for boat show vendors: up 30 percent
The association's board approved actions during the event in response to market conditions:
- Continue to get the message out to consumers that funds are available.
- Conduct regional round table dialogues with dealers, manufacturers and lenders to encourage new sources of funding for boating.
- Form a new service company committee to address changing legislative and other needs of these firms.
NRF REVISES HOLIDAY FORECAST UP TO 3.3%
Taken from SportsOneSource Media, Posted: 12/14/2010
After a solid start to the holiday season, the National Retail Federation announced Tuesday that it is revising its forecast to 3.3%, up from 2.3%. The upward revision is due to improvement in a variety of economic indicators including stock market gains, recent income growth, savings built up during the recession - all giving consumers the capacity to spend.
According to the National Retail Federation, November retail industry sales (which exclude automobiles, gas stations, and restaurants) increased 0.8% seasonally adjusted over October and 6.8% unadjusted over last year.
"The start to the holiday season has surpassed all expectations," said NRF President and CEO Matthew Shay. "While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast. In order to sustain this momentum for retailers and the U.S. economy, there must be a renewed focus on jobs as we enter the New Year."
November retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.8% seasonally adjusted over October and 9.2% unadjusted year-over-year.
"Consumers have not been suffering from a lack of spending power, they've just been missing the confidence to use it," said NRF Chief Economist Jack Kleinhenz. "With noticeable improvement in key economic indicators combined with great deals on merchandise, consumers have certainly shown they shouldn't be counted out this holiday season."
“Online sales remained strong through Dec. 19, according to ComScore. For the holiday season-to-date (49 days since Oct. 31, $28.36 billion has been spent online, marking a 12% increase versus the corresponding days last year.
The most recent week (week ending Dec. 19) reached $5.5 billion in spending, an increase of 14% versus the corresponding week last year. The final shopping weekend before Christmas reached $900 million in retail e-commerce spending, representing a strong 17% growth rate versus last year.”