Download Macro Scorecard for The Americas

MACROECONOMIC SCORECARD:
THE AMERICAS
Presented by:
Doug Hermanson
Economist
March 2013
Current Retail Conditions
Consumer spending challenged by flagging confidence
Summary of Macro Factors Affecting Retail*
Q4 2012 or Latest Available Month*
The Americas
Country
Brazil
Indicators
Canada Mexico
United
States
GDP, Annualized Growth Rate*
Residential & Business Investment*
Consumer Spending*
Retail Sales
Consumer Confidence
CPI Headline Index
CPI Food Index
CPI Core Index
█ = IMPROVING █ = MIXED █ = WORSENING
2
* GDP, Investment and Consumer Spending are quarterly through fourth quarter of 2012; Remaining
indicators are monthly through January, February or March 2013
• Brazil’s growth
pickup threatened
by inflation, weak
investment
• Mexico’s strong
retail growth is
trending weaker
• Canada slowed by
weak exports,
confidence; helped
by low inflation
• U.S. is holding up
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
2
The Macro Outlook for Retailing in the Americas
Slow growth trend shaped by inflation, U.S. uncertainty
• As the region’s major
trade partner, the U.S.
will shape the outlook
• Depends on gov’t
tax/spend issues
• Canada adds to the
risks with its own
housing, debt issues
• Brazil, Mexico 2013
prospects challenged
by trade outlook, price
pressures; but potential
still strong in long-term
Source: Kantar Retail
Short Term
(6–12 months)
Long Term
(2–5 years)
Economy constrained by
price pressures, gov’t
fiscal/monetary policies
Weakness amid retreating
housing market, elevated
debt levels, weak exports
Growth slowed by U.S.
impact, inflation concerns.
But outpacing region’s
other economies
Weakness/threats offset
by persisting gains in
housing, investment, hiring
Long-term growth will
hinge on ability to keep
price pressures in check
Extent of stronger growth
depends on avoiding
housing/debt bubble
Growth prospects
relatively strong as rising
costs cause U.S. firms to
shift trade closer to home
Growth kept modest by
constraints on income
growth, price pressures
Extent of region’s slower
growth depends on impact
Net
Outlook of inflation in Mexico/
Brazil, and U.S. prospects
Steady-to-strong growth
outlook led by commodity
markets. Dampened by
inflation & U.S. gov’t. cuts
Brazil
Canada
Mexico
United
States
© Copyright 2013 Kantar Retail
3
Summary Conclusions and Implications
• Short vs. Long Term. Expect retail demand to remain on a
modest and uneven path in the short term. When global growth
shifts into a higher gear will be determined most by the euro
debt crisis and emerging markets, likely in 2014 or beyond.
• Prices/Costs. Plan on global cost pressures that remain
relatively modest for most markets in 2013 as a result of
moderate global demand growth in the short term.
• The Americas. Plan for slower or modest growth in Mexico,
Canada and Brazil in the short term.
• Canada and Mexico facing modest/weak export demand from U.S.
• Brazil’s price pressures will be drag and present big downside risks
• Canada also is grappling with frothy housing and debt markets
• United States. Expect U.S. retail sales growth to keep a
respectable pace, but a notch below last year.
© Copyright 2013 Kantar Retail
4
The Americas: GDP Trends Mixed in Q4
Growth picks up in Brazil, Mexico; weakens in U.S., Canada
• Brazil’s Q4 gain
was mixed; weak
investment still a
challenge
• Mexico likely to let
up some, but still
outpace others
The Americas: Inflation-Adjusted GDP
Qtr-to-Qtr Growth, Seasonally-Adjusted Annualized Rate
2012.2
2012.3
2012.4
3.1%
3.1%
1.3% 1.5%
1.3%
2.2%
3.1%
1.5%
0.4%
1.9%
0.7% 0.6%
• Softness in Canada
• Underlying U.S.
growth trends
stronger than
suggested in Q4
United States
Brazil
Mexico
Canada
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
5
The Americas: Big Growth Range for Retail Sales
Brazil, Mexico letting up; growth weak in Canada
• Brazil and
Mexico’s retail
sales letting up
from very strong
pace
• U.S. holding at a
steady pace is
encouraging given
uncertainty
• Canada dragged
weaker by
homegoods
channels
The Americas: Nominal Retail Sales
Year-to-Year Percent Change**; Not Adjusted for Inflation*
15%
13%
Brazil
11%
9%
Mexico
7%
5%
United States
3%
Canada
1%
-1%
Mar-11
Mar-12
•Through January, except the United States is through February
**Growth is a three-month moving average
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
6
The Americas: Price Inflation Trends Diverge
Inflation rising at a dangerous pace in Brazil
• Brazilian inflation
signals need to
slow or change
economic policy
The Americas: Consumer Price Inflation
Year-to-Year Percent Change, Through February
15%
13%
11%
• Mexico’s price
pressures have
tailed off, but may
be picking back up
9%
7%
Brazil
5%
Mexico
• This contrasts with 3%
modest inflation in 1%
Canada, United
-1%
States—despite
Mar-11
recent uptick
United States
Canada
Mar-12
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
7
The Americas: Core Price Trends
U.S. and Canada are a contrast to Mexico, Brazil
• Brazil’s core
inflation trend is
less alarming, but
still elevated
The Americas: Core Consumer Price Inflation
Year-to-Year Percent Change, Through February
15%
13%
11%
• Mexico’s inflation
may be letting up
in terms of core
prices excluding
food, fuel
• U.S. and Canada
trends much more
benign; boosts
unit demand
9%
7%
5%
Brazil
Mexico
3%
United States
1%
-1%
Mar-11
Canada
Mar-12
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
8
The Americas: Consumer Confidence
Brazil trending weaker; Canada, U.S. volatile, if not weaker
• U.S. confidence
volatile in face of
tax/spend issues
The Americas: Consumer Confidence
Indices through February*
Brazil
120
• Canada holding up 100
despite weak
housing, U.S
80
concerns
• Brazil confidence
sagging amid
weaker retail sales,
elevated inflation
• Mexico holding up
Mexico
Canada
60
United
States
40
20
Apr-11
Apr-12
•Through February, except the United States is through March
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
9
Current Retail Conditions: Brazil, Mexico
The Americas: Selected Indicators
• Brazil and, to lesser
degree, Mexico show
troubling signs in
terms of inflation
indicators
1
• Brazil also is showing
weak investment
trends as rising wages
dampen
competitiveness
• These factors may
increasingly hurt retail
sales growth
Q4 2012 or Latest Available Month
█ = IMPROVING █ = MIXED █ = WORSENING
2
Growth
Q-to-Q or Chg Chg Q-to-Q
Period Y-to-Y
M-to-M Y-to-Y or M-to-M
GDP (Inflation-Adjusted), Annualized Growth Rate
Q4 '12 3.3%
3.1%
0.0%
1.6%
Residential & Business Investment (Inflation-Adjusted)
Q4 '12 3.5%
-2.0%
-2.1%
-3.3%
Consumer Spending (Inflation-Adjusted)
Q4 '12 3.5%
4.4%
1.4%
-0.5%
Retail Sales 1,2
Jan-13 6.0%
0.1%
-1.0%
1.1%
Consumer Confidence (Points) 1
Feb-13
4.9
0.2
-0.6
-0.2
CPI Headline Index, Not Seasonally Adjusted (NSA)
Feb-13 3.6%
0.5%
0.3%
0.1%
CPI Food Index, Not Seasonally Adjusted (NSA)
Feb-13 5.6%
0.1%
0.3%
-0.1%
CPI Core Index, goods excluding food and fuel (NSA)
Feb-13 3.3%
0.1%
-0.4%
0.0%
Brazil
Growth
Q-to-Q or Chg Chg Q-to-Q
Period Y-to-Y
M-to-M Y-to-Y or M-to-M
GDP (Inflation-Adjusted), Annualized Growth Rate
Q4 '12 1.4%
2.2%
0.5%
0.7%
Residential & Business Investment (Inflation-Adjusted)
Q4 '12 -4.4%
1.9%
1.2%
9.2%
Consumer Spending (Inflation-Adjusted)
Q4 '12 3.8%
4.7%
0.3%
0.6%
Retail Sales 1
Jan-13 12.3%
0.8%
-1.2%
0.1%
Consumer Confidence (Points) 1
Feb-13
-0.7
-1.3
-1.4
0.0
CPI Headline Index, Not Seasonally Adjusted (NSA)
Feb-13 6.8%
0.5%
0.1%
-0.4%
CPI Food Index, Not Seasonally Adjusted (NSA)
Feb-13 13.4%
1.6%
1.5%
-0.5%
CPI Core Index, excluding food and fuel (NSA)
Feb-13 5.6%
0.3%
-0.3%
-0.4%
1 A three-month moving average is used to smooth out volatility in consumer confidence
and retail sales
2 Estimated by Kantar Retail based on reported inflation-adjusted growth
Y-to-Y = Year-over-Year change; Q-to-Q = change from prior quarter; M-to-M = change
from prior month.
Chg Y-to-Y = rate of Year-over-Year change in percentage points; Same for quarterly
and monthly growth.
All data is seasonally adjusted unless indicated by "NSA" or Not Seasonally Adjusted
Mexico
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
10
Current Retail Conditions: Canada, U.S.
The Americas: Selected Indicators
• Weak exports and
homebuilding a drag
on Canada
1
• U.S. positive in some
key measures, but
tax/spend issues
have tripped up
confidence
• Muted core and food
price inflation is a
positive for unit
demand growth in
both countries
Q4 2012 or Latest Available Month
█ = IMPROVING █ = MIXED █ = WORSENING
2
Growth
Q-to-Q or Chg Chg Q-to-Q
Period Y-to-Y
M-to-M Y-to-Y or M-to-M
GDP (Inflation-Adjusted), Annualized Growth Rate
Q4 '12 1.1%
0.6%
-0.4%
-0.1%
Residential & Business Investment (Inflation-Adjusted)
Q4 '12 3.1%
2.9%
-0.1%
4.9%
Consumer Spending (Inflation-Adjusted)
Q4 '12 2.0%
2.7%
0.1%
-0.1%
Retail Sales Excluding Auto & Fuel Channels 1
Jan-13 0.4%
0.0%
-0.3%
0.2%
Consumer Confidence (Points) 1
Feb-13
5.6
-2.2
-3.5
-7.3
CPI Headline Index
Feb-13 1.2%
1.2%
0.7%
1.1%
CPI Food Index
Feb-13 1.9%
1.0%
0.8%
0.7%
CPI Core Index
Feb-13 1.4%
0.8%
0.4%
0.8%
United States
Growth
Q-to-Q or Chg Chg Q-to-Q
Period Y-to-Y
M-to-M Y-to-Y or M-to-M
GDP (Inflation-Adjusted), Annualized Growth Rate
Q4 '12 1.7%
0.4%
-0.9%
-2.7%
Residential & Business Investment (Inflation-Adjusted)
Q4 '12 7.2%
14.0%
1.0%
13.1%
Consumer Spending (Inflation-Adjusted)
Q4 '12 1.8%
1.8%
0.0%
0.3%
Retail Sales Excluding Auto & Fuel Channels 1
Feb-13 4.1%
0.4%
0.1%
-0.1%
Consumer Confidence (Points) 1
Mar-13
-5.5
-2.3
-3.9
-1.2
CPI (Headline Index)
Feb-13 2.0%
0.7%
0.4%
0.7%
CPI Food Index
Feb-13 1.2%
0.1%
0.1%
0.1%
CPI (Core Index, excluding food and fuel)
Feb-13 2.0%
0.2%
0.1%
-0.1%
1 A three-month moving average is used to smooth out volatility in consumer confidence
and retail sales
2 Estimated by Kantar Retail based on reported inflation-adjusted growth
Y-to-Y = Year-over-Year change; Q-to-Q = change from prior quarter; M-to-M = change
from prior month.
Chg Y-to-Y = rate of Year-over-Year change in percentage points; Same for quarterly
and monthly growth.
All data is seasonally adjusted unless indicated by "NSA" or Not Seasonally Adjusted
Canada
© Copyright 2013 Kantar Retail
Source: Statistics Canada, Mexico (INEGI), Brazilian Institute of Geography and Statistics, U.S. Department of Commerce and Kantar Retail
11
Frank Badillo
Chief Economist
Doug Hermanson
Economist
KRIQ
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F: +614.355.4059
T: +614.355.4044
F: +614.355.4059
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website:
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Topics
& Trends > Macroeconomics
© Copyright 2013 Kantar Retail