This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.

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This Week in Foodservice

Jobless Claims in Freefall in the U.S. as Foodservice Companies Scramble to Meet Unprecedented Challenges

U.S. retail sales declined 0.5% in February, according to the Census Bureau’s advance sales report for the month. This is in sharp contrast to 0.3% rise most forecasters anticipated for February. Sales increased 4.3% in February 2020 compared to the same month in 2019. The sales increase in January from December was revised up to +0.6% from +0.3%. In the first 2 months of this year total retail sales grew 6.5% compared to the same period in 2019.

Foodservice and drinking place sales fell 0.5% from January but were up 5.2% in February 2020 vs. the same time frame in 2019. The reported sales increase of 1.2% for January over December was revised down to +0.8%. In the first 2 months of 2020 foodservice and drinking place sales are up 8.5% over the same timeframe in 2019.

The difference between the forecast and the report is likely the forecast was done before the seriousness of the COVID-19 pandemic was apparent to forecasters. The question now is not if the employment picture is going to get worse. The question is how much worse.

There are a few factors to consider when looking at the data. The advance sales numbers are based on a small sample and are subject to revision. The study includes restaurants and bars only. Not surveyed are hotels, resorts, clubs, retailers, employee feeding, healthcare, education and military feeding.

Finally, the Census Bureau adjusts some but not all of the sales data for seasonal variations, holidays and weekends but there is no adjustment for menu price changes.

Economic News This Week

  • Initial-jobless claims increased 70,000 for a total of 281,000 for the week ending March 14. This represents the highest number of claims since Sept. 2, 2017, according to the U.S. Department of Labor, and is related to layoffs resulting from the COVID-19 virus pandemic.
  • Privately owned housing starts declined 1.5% from January but increased 13.8% from February 2019. Single-family housing starts were up 6.7% in February over January. Building permits issued in February for privately owned housing were down 5.5% from January but up 13.8% from February 2019.
  • Existing home sales grew 6.5% in February to a seasonally adjusted annual rate of 5.77 million. The increase followed a slight sales decrease in January. A spokesperson for the National Association of Realtors expects the coronavirus to slow traffic and said it is difficult to predict the effect the pandemic will have on the existing housing market.
  • The New York Federal Reserve’s Empire State Manufacturing Survey tumbled 34 points for a reading of -21.5. This is the lowest the index has been since 2009 and the largest decline in the survey’s history. (Any reading of less than zero means declining activity.) The New Orders Index was -9.3, a 31.4-point decline from February. The Shipments Index was -1.7, a 20.6-point decline from February. The Unfilled Orders Index stayed in positive territory at 1.4 but was a 3.1-point decline from February. Both employment indicators fell for the month. The Number of Employees Index dropped to -1.5 points, an 8.1-point decline from February. The Average Employee Work Week fell to -9.6.
  • The Philadelphia Federal Reserve’s March Manufacturing Business Outlook Survey weakened significantly, falling to -12.7 from 36.7 in February. The New Orders Index fell from to -15.5 from 33.6. The Shipments Index stayed in positive territory but just barely, at 0.2. The Unfilled Orders Index dropped to -7.4.
  • The U.S. Department of Labor’s Job Openings & Labor Turnover Study (JOLTS) reported job openings rose to 7 million on the last business day in January. This was an increase of 411,000. Over the course of the month, hires and separations changed little at 5.8 million and 5.6 million respectively. The number of quits changed little, too.
  • The Federal Reserve Reported a 0.6% increase in February industrial production. Manufacturing output inched up .0.1%. Mining output fell 1.5% while utilities jumped 7.1%. Capacity utilization increased 0.4% point in February for a final reading of 77%, a rate that is 2.8 percentage points below its long run (1972-2019) average.

Foodservice News This Week

For details and same store sales of other chains, please click here for the most recent Green Sheet.

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