Consumer confidence falls in May
New York City — Consumer confidence declined in May, according to the Conference Board Consumer Confidence Index. The Index now stands at 60.8, down from 66.0 in April. The Present Situation Index decreased to 39.3 from 40.2. The Expectations Index declined to 75.2 from 83.2 last month.
"A more pessimistic outlook is the primary reason for this month’s decline in consumer confidence,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects. Inflation concerns, which had eased last month, have picked up once again. On the other hand, consumers’ assessment of current conditions declined only modestly, suggesting no significant pickup or deterioration in the pace of growth."
Consumers’ assessment of current conditions, while still mixed, was somewhat less favorable than in April. Those claiming business conditions are "good" decreased to 14.6% from 15.5%, while those claiming business conditions are "bad" increased to 37.1% from 35.9%.
Consumers’ appraisal of the labor market was also less favorable than last month. Those stating jobs are "hard to get" increased to 43.9% from 42.4%, while those stating jobs are "plentiful" increased to 5.6% from 5.1%.
Consumers’ short-term outlook, which had improved marginally in April, turned pessimistic in May. The proportion of consumers expecting business conditions to improve over the next six months declined to 17.0% from 19.2%, while those anticipating business conditions will worsen increased to 15.5% from 14.0%.
Consumers were also pessimistic about the labor market outlook for the next six months. Those expecting more jobs in the months ahead declined to 15.9% from 17.8%, while those anticipating fewer jobs increased to 20.8% from 18.7%. The proportion of consumers expecting an increase in their incomes declined to 14.8% from 17.0%.
South Africa approves Wal-Mart deal—with conditions
New York City — Regulators in South African on Tuesday approved Wal-Mart’s 17 billion rand (about $2.4 billion) bid to buy a controlling share of Massmart Holdings Ltd. The Competition Tribunal of South Africa approved the deal on the condition that no job cuts take place for two years. It also requires the merged entity to give employment preference to 503 Massmart employees who lost their jobs.
Other conditions include a $14.6 million commitment to establish a program to develop local suppliers, honoring existing labor contracts, and recognition of the South African Commercial, Catering and Allied Workers’ Union as representative of the bargaining units for at least three years. The union was one of several unions that opposed the deal.
Wal-Mart had initially sought to buy all of Massmart, but reduced its bid to 51% on the advice of Massmart shareholders, because that means the new entity will continue to be listed on the Johannesburg exchange.
The deal was overwhelmingly approved in January by Massmart shareholders. It is Wal-Mart’s largest acquisition since buying Asda of Britain in 1999 for more than $10 billion.
Walmart gets green light in South Africa
It may have taken longer than originally thought, but competition authorities in South Africa cleared the way for Walmart to move forward with its acquisition of Massmart, the company announced Tuesday.
The nation’s Competition Tribunal did impose some stipulations on the company however, as Walmart’s reputation preceded it, and opponents of the merger used some negative perceptions of the company to extract concessions. For example, Walmart is required to establish a supplier development fund and commit to making no merger-related retrenchments for a period of two years while continuing to recognize the workers’ union that represents store employees for three years after the acquisition.
“We’re pleased that the competition authorities have recognized the benefits that our investment in Massmart can deliver,” said Walmart International president and CEO Doug McMillon. “We look forward to creating new jobs in South Africa, support for the development of South African exports, and providing previously underserved customers and communities with better prices and increased access to the products they want and need. All of this is consistent with the benefits we’ve delivered to markets around the world.”
According to Walmart, it is planning significant new store openings in Africa that will create thousands of new union jobs and drive a 50% growth rate in the Massmart food business over a five year period. Specifically in terms of fresh food growth, Walmart and Massmart have committed to ensure that the vast majority of those products will be sourced from South Africa.
“The Massmart management team welcomes the prospect of becoming part of the Walmart family and we will now advance our strategy to ensure that our financial base is geared to accelerate growth through the opening of additional locations, which will provide more jobs and also career opportunities for our existing team, while bringing more outstanding products with lower prices to our customers,” said Massmart CEO Grant Pattison.