I f worldwide demand for SUVs continues to grow at its current pace, the carbon emissions from these larger vehicles will outweigh the benefits from electric vehicles, a new study from the International Energy Agency found. The number of SUVs on the road around the world grew from 35 million in 2010 to over 200 million last year, representing 60% of the increase in the global car fleet over the 8-year period. The surge in popularity is having a big impact on the environment since SUVs are less fuel-efficient than their smaller counterparts. From2010 - 2018, SUVs were the second-largest contributor to the global increase in carbon emissions behind the power sector, the study found. This places SUVs ahead of trucks and aviation in terms of carbon footprint. The study also found that 100% of the increase in demand for oil for passenger cars was driven by the popularity of larger vehicles. “If consumers’ appetite for SUVs continues to grow at a similar pace seen in the last decade, SUVs would add nearly 2 million barrels a day in global oil demand by 2040, offsetting the savings from nearly 150 million electric cars,” the researchers found. 48% of car sales in the United States last year were SUVs, which was the highest percentage worldwide, but other countries are catching up. The shift towards bigger, less fuel-efficient cars is somewhat at odds with the auto market generally, where heavy R&D spending is fueling developments in energy-efficient vehicles, with researchers calling the growing number of larger cars and the impact on global emissions “nothing short of surprising.” Consumers demand for SUV’s is canceling out the environmental benefit from electric vehicles
Unemployment rate in the U.S. falls to a 50-year low
W hile concerns about a potential manufacturing slowdown swirl in the face of an ongoing trade war, the sector is facing a bigger and more immediate problem — a growing skills gap that is leaving hundreds of thousands of positions open. The National Association of Manufacturers said a record 522,000 jobs remained open in the sector in September. The group signed the “Pledge to America’s Workers” this summer in conjunction with the Trump administration, committing to training 1.86 million workers in the next five years to address the shortage of skilled workers. Those workers will be needed in droves. A report published last year byTheManufacturing Institute andDeloitte found that 4.6 million jobs will need to be filled in the sector over the next decade, and 2.4 million jobs may be left open due to a lack of trained workers. The shortage of workers has been the top concern in the industry for the past six quarters, according to NAM’s outlook. “Manufacturers all across the country and every manufacturing sector are facing the hiring challenge,” said Carolyn Lee, the institute’s director. “They need people with technical skills, with technical aptitude, but with an interest in learning, and continually learning the new technologies that come online.” As baby boomers retire in a tight labor market a major problem is attracting younger workers into the manufacturing sector. There has been a misperception of the industry itself as many see it as assembly lines and tedious work. However, manufacturing has become more high tech and efficient in recent years and companies are now opening their doors and inviting students to see the work for themselves and potentially generate interest in a career in the sector. Manufacturing Industry is facing a growing skills gap
Grocery sales are rising but so is the pressure on profits
U nemployment hit a fresh 50-year low in September even though nonfarm payrolls rose by just 136,000 as the economy nears full employment, according to the latest data from the Labor Department. The jobless rate dropped 0.2 percentage points to 3.5%, matching a level it last saw in December 1969. A more encompassing measure that includes discouraged workers and the underemployed also fell, declining 0.3 percent points to 6.9%, matching its lowest in nearly 19 years and just off the all-time low of 6.8%. At the same time, the economy saw another sluggish month of growth. The nonfarm payrolls count missed the 145,000 estimate from economists surveyed by Dow Jones; the expectation on the jobless rate was to hold steady at 3.7%. Wages also were a disappointment, with average hourly earnings little changed over the month and up just 2.9% for the year, the lowest increase since July 2018. The report comes amid uncertain times for the economy, with fears escalating that weakness abroad will bleed into the U.S. and possibly cause a recession. Readings earlier in the week showed continued contraction in manufacturing and a sharp decline in the much larger services industry. Federal Reserve officials watch the nonfarm payrolls count for clues as to how the economy is performing. While the low unemployment rate is one sign of economic strength, the weakness in wage growth shows that the central bank remains a good distance from its goal at maintaining an inflation rate around 2%.
W almart continues to lead the U.S. grocery sector, but the gap with its rivals is narrowing by the day, and pressure on profits is rising, according to a new report from Loop Capital Markets. Walmart has a 22% share of the $847 billion U.S. grocery industry, according to analyst Andrew Wolf. The retailer’s same-store sales growth at its grocery business has been outperforming rival supermarket chains since 2017, but the gap is narrowing. Also, as food prices are disinflating, grocery gross margins have worsened for Walmart. Walmart is not alone in this fight. In the second quarter, gross margins worsened for Ahold and Publix as well, but remained the same for Kroger and even improved for privately owned Albertsons. Industry experts expect more of the same in the third quarter of this year. The Commerce Department found that grocery sales in the third quarter rose by 4% year over year, which was a faster pace than the 2.6% gain in the second quarter and the 2.5% increase in the first quarter. Despite the sales growth, the pressure on profits means industry experts continue to hold a neutral view on the sector. Walmart is set to report fiscal third-quarter earnings on Nov. 14. Analysts are expecting earnings of $1.09 per share, according to Refinitiv. For Kroger, analysts are expecting fiscal third-quarter earnings of 48 cents per share. It last reported its earnings in September.
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NOVEMBER 2019 • SPOTLIGHT ON BUSINESS MAGAZINE
SPOTLIGHT ON BUSINESS MAGAZINE • NOVEMBER 2019
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