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CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY

Volume 13, Issue 17, May 01, 2013

Inside This Issue:
 
• Last Call for Maple Leaf Night in Las Vegas
• Terry Davis to Reveal Home Hardware’s Latest Business Strategies
• Three Weeks To Go Until CHHMA Quebec Golf Classic – May 23
• Register Now for the 44th Annual CHHMA Ontario Golf Tournament (May 28th) at Angus Glen Golf Club and Help
Support the Ontario Special Olympics!
 
• CHHMA's Team Building Event - Night at the Races - Register Now! 
• Loblaw Reports 40% Increase in First Quarter Profit; Plans REIT for July 
• Amazon Reports Solid First Quarter Profits
• Sears Canada Business Needs ‘Reset’
• Canadian Economy Grows 0.3% in February
• Industrial Product Prices Edge Up, Raw Material Prices Fall in March
• Latest U.S. Economic News


Association News


Last Call for Maple Leaf Night in Las Vegas
Don't Miss an Opportunity to Socialize with Major Customers While in Las Vegas ... 
Key Representatives from Canadian Tire, Chalifour Canada, Costco, Federated Co-op, Groupe BMR, Lowe’s,Home Hardware, RONA, TruServ Canada are registered to attend! 

Maple Leaf Night is once again taking place at the Mirage Hotel & Casino in Las Vegas on May 7th. This cocktail reception is always a great way to wind down after the first day of the show and is a great opportunity to mix and mingle with fellow members and retailers over cocktails and hors d-oeuvres while enjoying the bond of being Canadian.

You can also remind any of your Canadian retail customers to register online at www.chhma.ca!

Click here for further details and to register for the event
 




Terry Davis to Reveal Home Hardware’s Latest Business Strategies    
 
This year, Home Hardware has embarked on its latest 5-year plan. Join your fellow CHHMA members as Mr. Terry Davis discusses the company's past and current business strategies and his views on the Industry. It's been nearly 3 years since we heard first hand from Home Hardware so don't miss this opportunity!!

Terry Davis is Executive Vice-President & Chief Operating Officer, Home Hardware Stores Limited, and he will be speaking at a CHHMA breakfast meeting on Wednesday, May 15, 2013 (8:00 a.m. registration & breakfast, 8:45 a.m. – 9:30 a.m. presentation), at the International Centre (Conference Facility) in Mississauga. 

Click here to register.
 
 
Three Weeks To Go Until the CHHMA Quebec Golf Classic – May 23
 
The 38th Quebec Golf Classic is taking place at Le Club de golf Le Fontainebleau in Blainville, Quebec on Thursday, May 23 (11:00 a.m. shotgun start).

The cost to attend is $325 for CHHMA members, $375 for non-members and includes brunch, golf, cart, dinner and wine. You can also purchase dinner only tickets for $110. All prices include GST.

In order to hold this event, we also depend on sponsorship support. For a cost of $325, you get your company name on signage to be displayed at a hole on the course, registration and dinner as well as a mention by the emcee.

For further details and to register (registration is restricted to 144 golfers, so sign-up soon!), click here:    French    English

So make plans now to attend this fun industry outing with your colleagues or customers and hope to see you there on May 23rd!


Register Now for the 44th Annual CHHMA Ontario Golf Tournament (May 28th) at Angus Glen Golf Club and Help Support the Ontario Special Olympics!    
 
Pre-registration has already taken place at the CHHMA Spring Conference so don't delay in registering for this year’s CHHMA Ontario Golf Tournament at Angus Glen G.C. on May 28th.

Sign up for a fun time with your customers, work colleagues and industry peers while helping support a worthwhile cause! 
 
Click here for more details and to register. Don't forget to "Sponsor a Hole" in support of some very special athletes!


 
CHHMA's Team Building Event - Night at the Races - Register Now!       
 
For the past 16 years, CHHMA members have used the Night at the Races as an opportunity to team build with their employees, thank their employees for a job well done and engage with customers and their spouses at a fun night of dining and thoroughbred horse racing at the Woodbine Racetrack in Toronto. The CHHMA in-house betting competition also offers an opportunity for attendees to win some prizes.

Get your team together, invite your customers and enjoy a great evening in Favourites Dining Room, which offers a spectacular view of the track, for Night at the Races on June 12th.
 
Click here for further details and to register.


 
Industry News


Loblaw Reports 40% Increase in First Quarter Profit; Plans REIT for July
 
Loblaw Cos. Ltd. reported a 40% increase in first-quarter profit and said it plans to compete the initial public offering of its real estate investment trust (REIT) in early to mid-July.

The company, majority-owned by George Weston Ltd., announced earlier today that it also raised its quarterly dividend by 9% to 24 cents per share. This was the second time in six months that the company raised its dividend.

Loblaw’s profit rose to $171-million, or 61 cents per basic share, in the quarter, from $122-million, or 43 cents per basic share, a year earlier.

The latest results included a gain of 13 cents per share related to defined benefit plan amendments.

Metro, Canada’s No. 3 grocer, last week reported a quarterly profit that more than tripled, but it warned of a challenging competitive environment.

Loblaw said total sales rose about 3% to $7.04-billion, while same-store sales rose 2.8%.

“Greater assortment and an improved in-store experience are resonating with customers, translating into same-store sales growth and positive trends in tonnage and market share,” Executive Chairman Galen Weston said in a statement on Wednesday.

Loblaw’s first-quarter operating margin rose to 4.3% from 3.4%, a year earlier.

The company said in December it planned to contribute about 35 million square feet of property worth about $7-billion to its proposed REIT, which will allow Loblaw to reinvest in its core business and boost shareholder value.

The company expects to file a preliminary prospectus for the REIT in late May.

On Monday, Loblaw offered to compensate families of victims of a collapsed garment factory in Bangladesh that produced some of its Joe Fresh clothing line. The incident last week killed nearly 400 people.

The Joe Fresh clothing line, launched in 2006, represents a key part of Loblaw’s growth strategy.

The Retail Council of Canada said on Tuesday it would develop a new set of trade guidelines in response to the deadly collapse of the Bangladesh garment factory complex.

The move followed a private emergency meeting of retailers on Monday including Loblaw, Sears Canada Inc. and Wal-Mart Canada to discuss how it would deal with the tragedy.

Source: Reuters


Amazon Reports Solid First Quarter Profits 
 
Amazon.com Inc. reported solid first-quarter profits last Thursday as the world's largest online retailer controlled shipping expenses and other costs, but international revenue growth slowed.

Seattle-based Amazon, which has been on a spending spree in recent years, posted declines in net income and operating profit, year over year.

However, the company's gross profit margin came in at 26.6%, the highest in at least a decade, according to Scott Tilghman, an analyst at B. Riley & Co.

"It's a very solid performance with a strong expansion of gross margins," Mr. Tilghman said.

Amazon has been building distribution warehouses closer to customers, reducing shipping costs. It has also been charging third-party merchants on its marketplace higher fees for shipping services. In the first quarter, net shipping costs were 4.7% of sales, down from 5.1% a year earlier.

First-quarter revenue jumped 22% to $16.1-billion (U.S.), propelled by growing sales of digital content, cloud-computing services and gains in its main retail business.

International revenue rose 16% in the quarter, year-over-year. In the same period of 2012, Amazon's international revenue climbed 31%, year-over year. "International concerns are weighing on the company still. It's probably Europe mainly, given that the U.K. and Germany are the main markets for Amazon overseas," Mr. Tilghman said.

Shares fell $14.70, or 5.4%, to $260 after the results came out. The stock had gained $5.92, or 2.2%, to $274.70 during the regular session. Amazon forecast second-quarter revenue of $14.5-billion to $16.2-billion and operating results from break-even to $350-million. The latter guidance excludes stock-based compensation expenses and other items such as amortization of intangible assets.

Wall Street was looking for second-quarter revenue of $15.9-billion and operating results of $452-million, according to Mark Mahaney, an analyst at RBC Dominion Securities Inc. Amazon is stretching well beyond online retailing. The company soon plans to debut original TV programming.

Source: Reuters, Associated Press

 
Sears Canada Business Needs ‘Reset’ 
 
Sears Canada Inc. chief executive Calvin McDonald says there is still much work to be done as the company reconsiders what it sells in its stores and how many locations it operates.

The retailer has reduced its expenses by $100-million in the past two years and aims to shave another $100-million to $200-million from its fixed costs in the next couple of years, Mr. McDonald said last Thursday at the company’s annual general meeting.

But what the retailer really needs to focus on is growing sales and getting out of lacklustre categories. Our current mix of sales is not balanced to achieve sustainable, long-term growth,” he said.

A year into the former Loblaw executive’s three-year turnaround plan, Mr. McDonald said too much of Sears Canada’s business is still tied to sales lines that are shrinking, such as electronics, power outdoor tools and hardware.

“Over 50% of our sales are within categories that are declining in the market, or have their performance linked to external factors such as the economy or weather,” he said. “We cannot manage our business with the current balance of sales.”

The company’s merchandise mix is comprised of 55% apparel and accessories, 25% home décor, seasonal, hardware and electronics and 20% major appliances.

Gone from its main department stores will be electronics and window coverings. Toys are now sold only online and more changes are in the works, like a scaled down selection of its Craftsman hardware products.

In 2012 results posted in February, annual revenue fell for the seventh year in a row, a 7% decline to $4.3-billion. Same-store sales fell 5.6% in 2012.

The first phase of his plan involved shedding a glut of excess inventory and to focus on what he dubbed the “hero” categories, such as men’s dress apparel, baby goods, kitchen ware, major appliances and mattresses that have helped him validate “that this business has a pulse when we do the right thing.”

Same-store sales were positive across all of the hero categories in the second half of fiscal 2012, he said, and climbed in the double digits in the baby category, which includes furniture, apparel and accessories.

Items that Sears touted in its new Look Report promotional magazine generated three times higher checkout rates than typically advertised items, he said. And, critically, 40 per cent of customers who shopped items in the latest Look Report were under the age of 44, compared with just 16 per cent in February prior to the publication being released, his research found.

He’s determined to lure back younger, style-savvy shoppers to Sears with new offerings, he said. “We lost our rhythm and we lost our confidence,” he said. “We need to think differently. We need to act differently and we need to change our behaviour.”

Marketing key items each under a program called “Canada’s Best” each season has also met with success: a $179 women’s down winter parka sold out 96% of its stock at full price, he noted, and a $499 gas barbecue that has sold 25% of its stock already this spring despite frigid April temperatures across most of the country.

And on a bright note, McDonald said Target’s entry so far in Ontario has had a positive effect on Sears’ sales at the 19 locations where the two retailers are close by to one another.

Target has helped bring more traffic to the area, with some of those shoppers heading to Sears, he said. It helped that it ran “Sears Days” promotions when Target’s stores started to open, he said.

Mr. McDonald also said a key focus this year will be to continue taking costs out of the business. Sears, which laid off 700 employees in January, will look to outsource more projects and enter more partnerships, such as one with Markham, Ont.-based SHS Services Management Inc. in January to manage and operate its installed home services business.

Sears closed three underperforming stores in Vancouver, Calgary and Ottawa last year and sold the leases back to its landlords and continues to assess the value of its real estate. It has no current plans to exit more stores, he said, but continues to evaluate opportunities in the market.

Mr. McDonald said he doesn’t intend to exit more store locations but said he would do the “due diligence” if opportunities came up to “create value.”

“We’re here to remain in Canada to trade and become a relevant retailer,” he said. “In that there are non-strategic assets that we own today, if the opportunity is right to create value through those, we will explore those opportunities.”

Some of those opportunities don’t directly relate to retailing although support it in some way “but we can look at other ways to do it,” he said, suggesting outsourcing some operations is a possibility.

“There are a variety of those that we’re looking at but nothing to disclose at this point in time. But it is something that we’re willing to consider.”

Source: The Financial Post, The Globe & Mail

 
Economic News

Canadian Economy Grows 0.3% in February

Canada’s economy gathered momentum in February, beating market expectations and pointing to a more solid performance in the first quarter.
 
Monthly real GDP grew 0.3% in February Statistics Canada said Tuesday, while also revising upward its growth estimate for January to 0.3% from 0.2%.

Mining, quarrying, and oil and gas extraction was the main source of growth in February.

After many months of disappointment, analysts found themselves in the unusual position of having forecasts that were too downbeat. Most now see economic growth in the first quarter exceeding the 1.5% annualized rate predicted by the Bank of Canada earlier this month, and possibly even above 2%, depending on how March unfolds.

Mining, quarrying, and oil and gas extraction expanded 2.2% in February, a fifth consecutive monthly increase.

Manufacturing output was up 0.8% in February, following a 0.6% gain in January. Durable goods production grew 0.7% with increases in transportation equipment, non-metallic mineral products, and computer and electronic products. Non-durable goods production increased 1.0% in February. Growth in chemical, food as well as clothing and leather products more than offset declines in paper and petroleum and coal products manufacturing.

Construction increased 0.2% in February. Engineering and repair construction advanced, as did residential and non-residential building construction.

The output of real estate agents and brokers decreased 0.8% in February, as activity in the home resale market was down.

The finance and insurance sector rose 0.2% in February, mainly as a result of an increase in financial investment services.

Wholesale trade was down 0.2% in February, after rising 0.5% in January. The main declines were in the wholesaling of machinery, equipment and supplies, of personal and household goods and of farm products. These declines outweighed gains in the wholesaling of motor vehicles and parts as well as of food, beverage and tobacco products.

Retail trade edged up 0.1% in February. Increased activity at general merchandise stores and at motor vehicles and parts dealers was almost offset by declines at clothing and clothing accessories stores, gasoline stations, as well as furniture and home furnishings stores.

The arts and entertainment sector increased 3.3% in February after growing 4.0% in January, mainly the result of a continued rebound following the end of a NHL labour dispute. In contrast, accommodation and food services were down 1.0%, in parallel with a decrease in the number of international travellers to Canada.

The public sector (education, health and public administration combined) edged up 0.1%.

Utilities rose 0.4%, with increases in the demand for both electricity and natural gas.

Source: Statistics Canada, Reuters



Industrial Product Prices Edge Up, Raw Material Prices Fall in March              

Statistics Canada reported Tuesday that the Industrial Product Price Index (IPPI) edged up 0.1% in March, led by higher prices for motor vehicles and other transportation equipment. Meanwhile, the Raw Materials Price Index (RMPI) fell 1.7%, mostly because of lower prices for crude oil.

Industrial Product Price Index

The IPPI posted the third consecutive monthly increase in March, as prices in most commodity groups rose. Of the 21 major commodity groups, 15 were up, 4 were down, and 2 were unchanged.

The motor vehicles and other transportation equipment (+0.9%) was the largest contributor to the IPPI advance in March, which was primarily the result of higher prices for motor vehicles (+1.2%). The depreciation of the Canadian dollar relative to the US dollar was largely responsible for this increase.

Some Canadian producers who export their products report their prices in US dollars. Consequently, the 1.5% decrease in the value of the Canadian dollar relative to the US dollar may have the effect of increasing the IPPI. Without the measurable effect of the exchange rate, the index would have declined 0.3% instead of rising 0.1%.

Pulp and paper products (+1.0%) also contributed to the increase of the IPPI, though to a lesser extent. This increase was mainly attributable to higher prices for pulp (+2.7%).

Among the other product groups that posted gains was lumber and other wood products (+0.9%), particularly lumber and ties (+2.4%), which posted a fifth consecutive monthly increase. Concurrent with the increase in prices for lumber and ties, the number of housing starts was up for the second consecutive month in March.

Conversely, the IPPI advance was moderated primarily by petroleum and coal products (-1.8%), mainly as a result of lower prices for liquefied petroleum gases and diesel fuel. The IPPI excluding petroleum and coal products rose 0.3% in March.

Primary metal products (-1.2%) also declined, mainly because of lower prices for copper and copper alloy products, other non-ferrous metal products, nickel products and aluminum products.

Compared with March 2012, the IPPI was up 0.9%, the second consecutive year-over-year increase.

The IPPI advance was largely attributable to lumber and other wood products (+10.5%), specifically lumber and ties (+19.1%). Prices for lumber and ties continued to rise on a year-over-year basis, extending the upward trend that began in March 2012.

Compared with the same month a year earlier, motor vehicles and other transportation equipment (+2.1%) also contributed to the advance of the IPPI. The increase in this product group was mostly a result of the 3.0% depreciation of the Canadian dollar relative to the US dollar. Without the measurable effect of the exchange rate, the IPPI would have edged up 0.1% instead of rising 0.9% on a year-over-year basis.

Among the other commodity groups that posted increases was fruit, vegetable, feeds and other food products (+1.8%). Prices for feed products were up 9.0% on a year-over-year basis, continuing a trend that began in October 2010.

Conversely, the IPPI advance was moderated largely by primary metal products (-4.3%), specifically iron and steel products (-3.3%), other non-ferrous metal products (-3.9%) and aluminum products (-5.2%).

Raw Materials Price Index

Following two consecutive monthly increases, the RMPI declined 1.7% in March. Of the seven major commodity groups, four decreased.

The RMPI decline was largely attributable to lower prices for mineral fuels (-1.9%), specifically crude oil (-2.0%). Crude oil inventories in North America continued to increase in March. The RMPI excluding mineral fuels decreased 1.3% in March.

Non-ferrous metals (-2.7%) and animals and animal products (-1.7%) also contributed to the decline of the index, though to a lesser extent.

The decline in non-ferrous metals was led by copper concentrates (-3.5%), zinc concentrates (-4.8%) and other non-ferrous base metals (-5.3%). Almost all non-ferrous metal products posted lower prices in March.

Lower prices for hogs-swine for slaughter (-7.8%) and cattle and calves for slaughter (-1.3%) were the largest contributors to the decline in animals and animal products.

The RMPI decrease was moderated slightly by wood products (+0.1%).

Compared with the same month one year earlier, the RMPI decreased 2.0%, continuing the downward trend that began in March 2012.

The RMPI decline was mostly a result of lower prices for mineral fuels (-3.2%), specifically crude oil (-3.0%). Crude oil continued the year-over-year downward trend that began in March 2012. The RMPI excluding mineral fuels fell 0.8% on a year-over-year basis.

Among the other commodity groups that contributed to the year-over-year RMPI decrease were non-ferrous metals (-3.5%) and animals and animal products (-0.8%).

Compared with March 2012, the RMPI decline was moderated slightly by vegetable products (+2.8%) and wood products (+3.5%).

Source: Statistics Canada  

 
Latest U.S. Economic News
 
U.S. Consumer Confidence Rebounds in April
U.S. consumer confidence rebounded in April as Americans felt better about the outlook for the economy and their income prospects, according to a private sector report released on Tuesday.

The Conference Board said its index of consumer attitudes rose to 68.1 from an upwardly revised 61.9 in March. Economists had expected a reading of 60.8, according to a Reuters poll.

March was originally reported as 59.7. The expectations index gained to 73.3 from 63.7, while the present situation index improved to 60.4 from 59.2.

Even so, consumers remain vulnerable to concerns over the recent payroll tax hike and the $85-billion (U.S.) in automatic government spending cuts known as the sequester that was triggered last month, the report said.

“While expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement.

Consumers’ labour market assessment was mixed. The “jobs hard to get” index rose to 37.1 per cent from 35.4 per cent the month before, while the “jobs plentiful” index also gained to 9.8 per cent from 9.5 per cent.

Consumers felt better about price increases with expectations for inflation in the coming 12 months falling to 5.5 per cent from 5.8 per cent.

Source: Reuters

U.S. Home Prices Post Biggest Annual Gain in Seven Years
U.S. single-family home prices rose more than expected in February, racking up their best annual rise since May 2006 in a fresh sign the housing recovery remains on track, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1.2% on a seasonally adjusted basis compared to January, topping forecasts for 0.9%.

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

On a non-adjusted basis, prices rose 0.3%.

Prices in the 20 cities gained 9.3% year-over-year, also beating expectations for 9% and the biggest increase since May 2006.

On an annual basis, prices improved in all 20 of the cities covered in the index, the second month in a row that all of them have risen.

The biggest gains were seen in some of the cities that were hardest hit by the crisis, including Phoenix, which rose 23%. Atlanta climbed 16.5%, while Las Vegas was up 17.6%.

On average, national home prices are back to the levels they were at in the autumn of 2003.

Prices have been rising since last February as the sector started to turn the corner, helped by tighter inventories and improved sales.

Last year’s housing recovery has continued into 2013, though the pace of sales has cooled recently. Still, housing is expected to continue to be a source of strength for the economy this year.

Source: Reuters

U.S. Pending Home Sales Rise in March
Contracts to purchase previously owned U.S. homes rose in March, as the housing market continues to accelerate this year.

The National Association of Realtors (NAR) said on Monday its Pending Sales Index, based on contracts signed last month, rose 1.5% to 105.7. Activity in recent months has shown modest improvements, and contracts last month reached the highest level since April 2010.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 1.0% after a previously reported 0.4% slip in February.

The housing upturn is expected to add support to the economy this year although there have been signs of weakness lately.

The inventory of homes for sale remains low, leading to a rise in home prices in most markets. The Realtors group said the market appears to be levelling off due to the supply shortage which has pushed up home values, putting a solid foundation under the housing recovery.

“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply. Little movement is expected in near-term sale closings, but they should edge up modestly as the year progresses,” said NAR chief economist Lawrence Yun in a statement.

Pending home sales were up 7.0% compared to March last year.

Source: Reuters

U.S. Consumers Boost Spending Despite Higher Taxes
Americans spent more last month and their income grew, the latest indication that tax increases have yet to hold back the consumer.

The Commerce Department said Monday that consumer increased their spending 0.2% in March from February. That followed a 0.7% jump in February and a 0.3% gain in January.

Income increased 0.2% last month, following a gain of 1.1% in February. After-tax income also rose 0.2%.

Higher income has helped offset an increase in Social Security taxes that took effect on Jan. 1. Last Friday, the government said consumer spending rose from January through March at the fastest pace in more than two years.

Spending on services drove the March increase. That was partly due to an unseasonably cold March, which required Americans to pay more to heat their homes.

Still, other reports suggest consumers may be starting to feel the impact of the tax increase. Sales at retail stores and restaurants fell in March by the most in nine months.

The 2-percentage-point tax increase has reduced tax-home pay for nearly all Americans. A person earning $50,000 a year will have about $1,000 less to spend this year. A household with two highly paid workers will have up to $4,500 (U.S.) less.

That may slow consumer spending and economic growth in the April-June quarter. Consumer spending accounts for about 70% of economic activity.

Other trends may offset some of the impact of the taxes this year. Consumers have cut their debts and rising home values and stock prices have increased household wealth.

In addition, gasoline has become cheaper. The national average price for a gallon of gas has fallen by 29 cents since Feb. 27 to $3.50. A decline in gas prices leaves consumers with more money to spend on other things.

Source: The Associated Press

U.S. Economic Growth Falls Short of Forecasts, Weakness Ahead
U.S. economic growth regained speed in the first quarter, but not as much as expected, which could heighten fears the already weakening economy could struggle to handle deep government spending cuts and higher taxes.

Gross domestic product expanded at a 2.5% cent annual rate, the Commerce Department said last Friday, after growth nearly stalled at 0.4% in the fourth quarter. Economists had expected a 3.0% growth pace.

“It wasn’t the bang-up start to the year we had hoped for, and the signals from March suggested that we will only decelerate from here,” said Avery Shenfeld, chief economist at CIBC World Markets Economics in Toronto.

Part of the pick-up in activity reflected farmers’ filling up silos after a drought last summer decimated crop output. Removing inventories, the growth rate was a tepid 1.5%.

Still, most areas of the economy contributed to growth, with the exception of government, the trade sector and investment by businesses in offices and other commercial buildings.

While consumer spending increased solidly, it came at the expense of saving, which does not bode well for future growth.

A separate report showed worries about finances sapped consumer morale in April. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 76.4 last month from 78.6 in March.

The GDP report offers ammunition for the Federal Reserve to maintain its monetary stimulus. The U.S. central bank, which meets next week, is widely expected to keep purchasing bonds at a pace of $85-billion a month.

Data ranging from employment to retail sales and manufacturing weakened substantially in March after robust gains in the first two months of the year, and the factory sector appears to have slowed further in April.

Many forecasters expect the U.S. economy’s softness to persist into the third quarter until signs of a convincing revival emerge.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.2% pace – the fastest since the fourth quarter of 2010. It grew at a 1.8% rate in the fourth quarter of last year.

The increase in spending came despite the return of a 2% payroll tax and higher gasoline prices. Households, however, had to cut back on saving as incomes dropped at a 5.3% rate, the steepest descent since late 2009.

The saving rate – the percentage of disposable income households are socking away – fell to 2.6%, the lowest since the fourth quarter of 2007, from 4.7% in the final three months of last year.
Despite the spike in gasoline prices, inflation pressures were benign. Inflation rose at a 0.9% rate, the smallest increase since the second quarter of 2012 and a sharp slowdown from the 1.6% pace logged in the fourth quarter.

A core measure that strips out food and energy costs rose at a 1.2% rate.

Government spending fell at a 4.1% pace, with declines at both the federal and the state and local levels. Government spending has declined for 10 of the last 11 quarters.

“The decline in government spending over the past two quarters is the biggest six-month contraction since the Korean war ended,” Paul Ashworth, chief U.S. economist at Capital Economics in Toronto said in a research note.

Business spending on equipment and software slowed sharply, growing at an only 3.0% rate after a brisk 11.8% pace in the fourth quarter.

Economists caution that it is too early to blame the cooling in business investment and other more recent signs of economic softness on the $85-billion in mandatory government spending cuts, known as the sequester, that began on March 1.

Homebuilding marked an eighth straight quarter of growth, though the pace moderated from the fourth quarter. Housing added to growth last year for the first time since 2005 and its recovery should help ensure the economy does not contract.

While export growth rebounded, it was outpaced by imports, resulting in a trade deficit that cut off half a percentage point from output.

Source: Reuters, The Globe & Mail
 

 Upcoming CHHMA Events 

       
CHHMA Maple Leaf Night
Tuesday, May 7, 2013
The Mirage Hotel & Casino, Las Vegas, Nevada

Terry Davis (Home Hardware Stores Limited) Breakfast Seminar
Wednesday, May 15, 2013
International Centre (Conference Facility), Mississauga, Ontario

CHHMA Quebec Golf Classic
Thursday, May 23, 2013
Club de Golf Le Fontainebleau, Blainville, Quebec

CHHMA Ontario Golf Tournament
Tuesday, May 28, 2013
Angus Glen Golf Club, Markham, Ontario

CHHMA Night at the Races
Wednesday, June 12, 2013
Woodbine Racetrack, Toronto, Ontario

Industry Memorial Golf Classic
Tuesday, October 1, 2013
Blue Springs Golf Club, Acton, Ontario

CHHMA Industry Calendar

To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 ext.21.


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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca