In This Section:
Foodservice E&S List Prices Rose 5.38%, Says AutoQuotes
NRA Performance Index Dips But Stays Positive In May
Consumer Sentiment, Interest Rates Up; Job Growth Moderate
Too Early To Predict Any Effects From London Terrorist Bombing
This issue's Regulatory Report Sponsor: APW Wyott Innovations | Industry ReportSponsor: Kolpak/Manitowoc Foodservice Group
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Foodservice E&S List Prices Rose 5.38%, Says AutoQuotes
Foodservice equipment and supplies manufacturers raised prices a blended 5.38% during the nine months ended June 1, according to Kent Motes, president of AutoQuotes. The median price increase was 4.4%, meaning half of all reporting manufacturers cited increases higher than that figure, while half reported lower. Individual company price changes ranged from -8.97% to 21.79%.
The number compares list prices for 230,565 models and accessories of equipment, supplies and related items from 334 manufacturers.
While noting the increases measure list prices, not street or "deviated" pricing, Motes said, "the increases are higher than I expected." On the other hand, he told FER Fortnightly he is "not seeing a second round of increases this summer, as we did last year. Manufacturers put through their increases in the first quarter, and things have been fairly quiet since then."
Manufacturers have been under severe pressure to raise prices since absorbing increases in materials prices such as stainless steel and others that have sometimes approached 70%. Materials normally comprise 30% to 40% of the cost of a typical product. Soaring health-care costs also have been a factor. So it seems unlikely most manufacturers have yet to cover the difference, many industry watchers say.
The 5.38% increase compares with a 4.72% increase for the nine-month period ending Oct. 1, 2004.
The actual increases are close to those forecast by Foodservice Equipment Reports for '05. The magazine projects a 4.8% increase for the industry as a whole.
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NRA Performance Index Dips But Stays Positive In May
Growth is slowing, but it's still growth. The Restaurant Performance Index, maintained by the National Restaurant Association, turned down moderately in May as six of eight components declined. The Index fell to 101.4 from 102.2 in April. Both core indices, the Current Situation Index and the Expectations Index, also declined. In all cases however, the indices remain above 100, the point that signals expansion.
The Current Situation Index is near flat, however, dipping to 100.4. Same-store sales, traffic and capital expenditures components of the CSI all declined during the past three months. Only the labor component rose.
Looking further out, in the Expectation Index, the six month outlook for same-store sales, staff and capital expenditures were lower. Expectations for improved business conditions, however, did rise.
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Consumer Sentiment, Interest Rates Up; Job Growth Moderate
Job growth came in under economists' expectations in June, with the U.S. Labor Department reporting on Friday nonfarm payroll growth of 146,000. The June number followed disappointing growth in May as well, though the previous estimates for April and May were increased by 44,000 total. The May estimate is now 104,000, up from the original estimate of 78,000.
While the results were disappointing, most observers saw the numbers as continuing the pace of "gradual" improvement in the economy and job creation. The unemployment rate for June dropped to 5.0%, the lowest rate since September 2001. The average monthly nonfarm payroll growth for the year is 181,000, above the 150,000 mark most economists use to signal expansion.
In other macro-economic news since our last Fortnightly, consumer sentiment and expectations showed surprising jumps in June, according to the University of Michigan Surveys of Consumers. The Sentiment Index rose to 96.0 in June from 86.9 in May. The Expectations Index also rose nearly 10 points, hitting 85.0 in June. But Surveys Director Richard Curtin warned that rising gas prices were chipping into confidence as the month wore on.
The Federal Reserve, as expected, raised the Federal funds rate and discount rate another quarter point at its Open Market Committee meeting June 29-30. In its statement accompanying the announcement, the Fed said, "Although energy prices have risen further, the expansion remains firm and labor conditions continue to improve gradually."
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Too Early To Predict Any Effects From London Terrorist Bombing
As we went to press, it was far too early to forecast any detrimental effects on the foodservice or hospitality industries in the United States as a result of the terrorist bombing of the London transit system. First word out of the United Kingdom, however, noted understandable concern about the impact on tourist travel to the U.K this summer. The U.S. stock indexes actually rose on the day of the bombing.
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