Industry Crib Sheet: Consumer Spending Dips in July but Confidence Soars

September 2, 2014

Arizona Tops Clean Energy Jobs Growth, Which Doubled Pace in Q2

RFID Will Be 'Indispensable' in Manufacturing, Says Research Firm

Personal consumption expenditures, a closely watched measure of consumer spending, unexpectedly fell 0.1 percent in July, while personal incomes edged up only 0.2 percent, the smallest monthly growth this year. The monthly decline in personal spending was the first in six months, according to data from the Bureau of Economic Analysis

, dousing hopes for a strong start to third-quarter consumer activity. However, consumer confidence hit a seven-year high in August, suggesting there may be a quick rebound from the dip.

"It's a weak starting point for the third quarter," Jacob Oubina, RBC Capital Markets' senior U.S. economist, commented to Bloomberg

. "It's going to lead to a markdown in third-quarter forecasts." Consumer spending accounts for about 70 percent of the U.S. economy. Economists had projected a 0.2 percent spending rise for July and third-quarter GDP growth of at least 3 percent, expecting momentum to gain in consumer activity.

The BEA figures follow the Census Bureau's flat retail sales report

for July, another primary measure of consumer spending. Data from the BEA and Census Bureau, both Commerce Department agencies, indicate that Americans continue to be careful with their household funds as income growth continues to be soft.

Before dropping in July, personal spending had gained a steady if modest momentum over the previous three months, with a 0.4 percent increase in June. Incomes had risen 0.5 percent in both May and June, prompting expectations of stronger salary and wage growth that would fuel discretionary spending. Economists had forecast a 0.3 percent rise in incomes for July. Personal disposable income in July ticked up 0.1 percent, following a 0.5 percent gain in June.

Spending on durable goods shrank 0.6 percent, after increasing 0.5 percent in June. Outlays for non-durable goods in July declined 0.2 percent, following a 0.3 percent expansion the previous month. The BEA said weaker automobile purchases accounted for most of the July decrease in durable goods consumption, which is in line with the 0.2 percent drop in July auto sales as measured by the Census Bureau.

The BEA's July personal consumption expenditures price index -- the measure of core inflation, which excludes prices for food and energy -- rose 1.5 percent year-over-year. That remains below the Federal Reserve's 2 percent inflation growth target for the economy but was in line with expectations.

Wages and salaries in the private sector increased $12.9 billion in July, compared with an increase of $25.6 billion in June. Manufacturing pay went unchanged in July after increasing $5.1 billion in June.

Still, consumers reported greater optimism in August. The Conference Board released its August consumer confidence index

with a 92.4 reading, the highest since October 2007. It was a 1.9-point rise from July, while economists had forecast the index to fall to 88.5. Americans also felt much more positively about current economic conditions, as the Conference Board's "present situation index" jumped 6.7 points to 94.6.

The Thomson Reuters/University of Michigan's consumer sentiment index

, another closely watched indicator, similarly reached its highest level since July 2007 with a 82.5 reading in August.

Despite weak income growth, Americans are feeling more confident about the economy because of job market strength. "The weakness in spending will quickly subside this fall as consumer confidence is supported by record highs in the stock market, rising housing prices, and improving labor market conditions," said Michael Woolfolk, global markets strategist at BNY Mellon in New York, in a Reuters report


Arizona Tops Clean Energy Jobs Growth, Which Doubled in Pace in Q2

A trade group says the number of clean energy and clean transportation jobs in the United States expanded in the second quarter at twice the rate of the first quarter. Environmental Entrepreneurs

, a nonprofit group based in Washington, D.C., says 29 states announced more than 12,500 clean energy job between April and June, based on information it collected from state reports.

According to the group, solar power generation led all sectors in the second quarter with more than 5,300 job additions. That was followed by the 2,700 new positions added in the wind energy industry. Arizona recorded the most new clean energy jobs, predicated by the 350 new positions attached to a new solar project in San Luis, Ariz., by Solar Wind Energy Inc. Arizona was followed by California, which saw payroll expansions in the utility-scale solar industry as well as 500 new jobs announced by electric vehicle maker Tesla Motors.

Environmental Entrepreneurs says Michigan placed third, supported by GM's announcement of 1,400 jobs related to the manufacturing of advanced battery technologies. Utah, Massachusetts, New York, Nevada, New Mexico, North Dakota, and North Carolina rounded out the top 10 states producing cleantech employment, according to the group.

Among other notable clean energy projects the group cited, SolarCity's $200 million acquisition of solar panel maker Silevo and the announcement of the construction of a $450 million, 1-gigawatt solar panel manufacturing plant in Buffalo, N.Y. could potentially be the largest in the United States. It is slated to go online in 2016.

Environmental Entrepreneurs says that for the fifth straight year, the solar industry led new job announcements.

RFID Will Be 'Indispensable' in Manufacturing, Says Research Firm

New analysis from Frost & Sullivan

 finds that the market for radio frequency identification (RFID) technology was worth $1.29 billion in 2013 and is estimated to nearly quadruple to nearly $5 billion in 2020. Over the forecast period, demand for active RFID will increase to fulfill the need by manufacturing businesses to be more efficient.

The business model and structure of the manufacturing industry, according to the research firm, have grown beyond single enterprises and locations, making RFID solutions "indispensable" in global supply chains. With increasing adoption of lean manufacturing strategies prompting most industry players to focus on and outsource niche operations, RFID solutions will enhance supply chain visibility and control of inventory, operations, and logistics across diverse manufacturing points, the firm says.

As RFID solutions facilitate real-time tracking of assets in different locations, manufacturers will be able to allocate resources more cost effectively and see gains in productivity. These benefits, along with reduced labor requirements, greater information accuracy, and improved sales and customer service, will boost RFID adoption.

"Opportunities for RFID solution providers exist across all application segments within manufacturing," said Frost & Sullivan Measurement & Instrumentation Senior Research Analyst Nandini Bhattacharya. "Growth prospects in the automotive and aerospace manufacturing sectors are especially promising, owing to supportive industry regulations."

However, Frost & Sullivan adds that as long as the global economy remains uncertain, customers - particularly small and medium enterprises - will be reluctant to invest in RFID solutions unless they see a direct correlation to cost-saving advantages. Cost is, therefore, a discerning factor for RFID purchasing decisions. Scalability of solutions and technology support will be important criteria influencing uptake.

"Partnerships and acquisitions are rampant and necessary for this market to continue to expand," noted Bhattacharya. "Without such collaborations, the breadth of knowledge and expertise needed for success is typically too wide even for the largest of companies."

In addition to forecasting growth in active RFID, Frost & Sullivan also looked at the passive and battery-assisted passive RFID segments in its research.

Top photo credit: praisaeng at



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