September 01, 2011
In a lot of ways, news, like beauty, is in the eye of the beholder. How do you weigh one fact vs. another, assuming they’re both facts? What’s important, obviously, depends on what you’re trying to do.
So what if you’re in the foodservice business? If you’re an operator, or a dealer, or a consultant or supplier, what’s significant, and what’s not?
As we close out this September issue, for example, the global economic news is very bad for a lot of people, but very good for others, depending on who’s buying and who’s selling.
Yes, Congress botched the handling of the debt ceiling. So did the general media, it could be argued. Over a short period, several bad things happened. Our representatives showed they felt ideology and partisanship outweighed the good of the country, and that’s not how you convince people to lend money.
Meanwhile, global markets unraveled in a fit of hand-wringing over global debts, not just ours but everyone else’s too. Then Standard & Poor’s downgraded long-term U.S. debt, and more unraveling ensued, aided in its irrational dive by the beauty of programmed trading.
An unsettling stew, to be sure. And its impact will not be positive. But is it the news that hits closest to home for our industry?
No. Counterbalancing some of the bad news, a smaller but important piece of good news arrived at the end of a bad week in August. The Bureau of Labor Statistics released its July jobs report, and the figures were better than they’ve been for a while. Nonfarm payrolls rose by 117,000. The private sector was up by 154,000, in fact, but that number was muted by 37,000 government jobs lost.
Now, it’s true that experts figure we need something like 250,000 jobs a month to keep up with population growth. So we’re not where we need to be. But 117,000 is a step in the right direction, and it beats the heck out of the enormous negative numbers we were seeing not that long ago.
And more good news tagged along. It turned out that dismal job numbers for May and June had been unnecessarily pessimistic. BLS revised its totals upward to 99,000 new jobs for May and 80,000 for June. Still lame, but less lame. And better news yet—all the gains those months, too, were in the private sector. Government jobs shrunk.
All of which is good news for foodservice, and for equipment and supplies. And it lines up, roughly, with reports from all around our industry. As Robin outlined in his own column this month, big public companies in E&S have been reporting growth. The MAFSI Barometer has been showing growth, and so has the National Restaurant Association’s Restaurant Performance Index. The FER Top Dealer study, which appeared in the June issue, also documented third-party verified growth.
Add it all up, and FER now forecasts E&S market growth at the manufacturer level at 4% in current dollars, 2.2% real. And next year looks like 4.7% nominal, 2.6% real.
So let’s not stampede over bond and stock prices and global debt just yet. There’s still a lot of underlying strength in our own part of the economy. Jobs are always good news for foodservice demand. Add in pent-up demand for replacement and remod volumes in E&S, and get ready. There’s a lot of work to be done.