Franchise Indicators to Watch in 2015
From the price of kiwis to tonnage of crude coming into port from the North Sea, there are countless economic indicators for the savvy businessperson to watch.
As everybody will be telling you about oil prices and the unemployment rate, here are a few indicators I think will have the biggest impact on franchisors of all stripes throughout 2015:
Restaurant Performance Index
The National Restaurant Association’s Restaurant Performance Index (RPI) is a monthly index tracking the health of and outlook for the U.S. restaurant industry. Its latest index, released on Dec. 31, shows positive sales and traffic resulting in an optimistic climate and future outlook for restaurant operators—21 consecutive months of expansion.
From the report: “Along with positive sales and traffic results in recent months, a majority of restaurant operators made capital expenditures. Fifty-four percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down slightly from 57 percent who reported similarly last month.”
Considered a barometer of the health of the economy as it relates to consumers, The Conference Board’s Consumer Confidence Index is significant for anybody in business. It measures how consumers feel about current business and employment conditions, as well as expectations for the coming six months.
Most recently released in December, the index is at its highest level since February 2008—92.6 up from 88.7 as reported in November.
This good news suggests that consumers have become less reluctant to make big-ticket purchases, and are more willing to splurge on things like going out to eat.
Employment Trends Index
This time saver by The Conference Board is an aggregation of eight labor-market indicators including percentage of respondents who say they find jobs “hard to get,” initial claims for unemployment insurance, number of employees hired by the temporary-help industry, ratio of involuntarily part-time to all part-time workers, job openings, industrial production and real manufacturing and trade sales.
The latest January numbers show the ETI increasing in December to 128.42, up from 127.83 in November—a 7.5 percent gain over this time last year.
Gad Levanon, managing director of macroeconomic and labor market research said, “The strengthening in the ETI suggests that rapid job growth is likely to continue throughout the first half of 2015. And as the labor market tightens further, acceleration in wage growth is soon to follow.”
Small Business Optimism
From the National Federation of Independent Business (NFIB) comes news that its Small Business Optimism Survey rose 2.3 points to 100.4 in December, its highest level since 2006.
Calling its findings “a strong signal that American small businesses could be finally shaking off the effects of the Great Recession,” the survey has shown a dramatic improvement from the depths of early 2009 with a very positive upward trajectory heading into the new year.
From the Bureau of Labor Statistics (BLS), the Job Openings and Labor Turnover Survey shows there were 5 million job openings on the last day of November, up from 4.8 million in October. Hires (5 million) and separations (4.6 million) declined in November.
My favorite is the “quits rate,” which currently stands at 1.9 percent and is showing employees have become less tethered to the stability of their current jobs.
Looking ahead, we will keep our eyes peeled for even more obscure indicators that are relevant in the franchise world. For a deeper dive into the franchise world in particular, check out our previous article on the private-sector franchise industry adding 38,000 jobs in December—not bad!