In This Section:
MAFSI Business Barometer Posts 2.7% Rise In First Quarter
Eating And Drinking Place Sales Gain In April; Several Macro Factors Improve
Bad News Catches Up With Blue Chip Forecasts
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MAFSI Business Barometer Posts 2.7% Rise In First Quarter
Overall sales rose 2.7% in 2005's first quarter, compared to the year-earlier period, according to the latest Business Barometer fielded by Manufacturers' Agents Association for the Foodservice Industry. Sales were up in all five regions reported by MAFSI.
The gain comes on the heels of a 2.6% gain in fourth quarter of '04. This year's first-quarter growth was more than double the year-earlier period's 1.2% gain.
As has been true for several quarters, Canada showed the strongest sales gains, up 3.9% for the quarter. The Northeast followed closely with a 3.7% rise. The softest regions were the South with a 2.0% gain and Midwest, up 2.1%.On a product basis, tabletop product sales grew 3.1%, supplies gained 2.8%, equipment 2.7% and furniture, 2.6%.
The reps surveyed forecast a 3.9% gain for the second quarter. They had forecast 4.0% in the first quarter.
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Eating And Drinking Place Sales Gain In April; Several Macro Factors Improve
Eating and drinking place sales rose a seasonally adjusted 0.9% in April according to Census Bureau statistics released May 12. The increase follows a decline in March, when many retail sectors saw unexpected softness. In April overall retail sales were up 1.4%; excluding surging auto sales the rise was 1.1%, according to Commerce Department data.
The news follows a week of improving macro-economic data. Job growth in April was unexpectedly robust, with the economy adding 274,000 jobs. Most sectors of the economy benefited from the gains. Commerce also revised upward previous estimates of job growth for February and March.
The report also stated that the average work week grew for the first time in seven months. Job growth is a key factor in commercial restaurant sales.
And in another unexpected development, the trade deficit, which has been running consistently at record levels, fell 9.2% in March.
The good news follows a month of negative reports that have battered stock values and led many economists to downgrade their forecasts for 2005.
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Bad News Catches Up with Blue Chip Forecasts
A litany of disappointing economic reports has caught up with the consensus forecasts of macro-economic growth published monthly by Blue Chip Economic Indicators. The forecast of year-over-year real growth in gross domestic product dropped 0.3 points in the latest issue, released May 10. The economists now expect 2005 GDP growth to be 3.4% this year. Of the 53 economic groups surveyed, 43 reduced their '05 forecast. The forecast for '06 growth also dropped 0.1 point to 3.3%.
Quarterly GDP forecasts for the remainder of the year now stand at 3.0% for the second quarter—0.6 point less than forecasted a month ago—3.4% for the third quarter and 3.3% for the final quarter.
The economists cited several factors leading to their reduced forecasts, including the much lower than forecast first estimate of GDP growth in the first quarter, continuing inflation worries, a surprising buildup in inventories and lower than anticipated spending by business.
On the upside, the Commerce Department data for the first quarter showed higher than expected growth in personal consumption expenditures.
Blue Chip Executive Editor Randall Moore noted that a number of factors pushing forecasts lower appear temporary. Employment data for April was surprisingly strong and an inventory correction will last only a quarter or two. And it appears inflation, led by energy prices, may have peaked. Business investment is also expected to return to higher growth rates.
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