Supply Chain by the Numbers

- Sept. 21, 2017 -

  Supply Chain by the Numbers for Week of Sept. 21, 2017

Demography is Destiny, and Right Now that Isn't Good; Amazon Making More Moves in Mexico; Hurrican Harvey Hits August Manufacturing Output; Mixed Data on US Retail Sales Forecasts



That is the rate of female fertility – the average number of children per woman – that is projected for Finland for 2016, according to Statistics Finland, a government group. That is of course well below the 2.1 or so average generally said to be the cutoff between population stability and population decline. What's more, in August Finland saw the lowest number of births in a month than it has had in 150 years. The country has tried numerous programs and incentives to raise that birth rate, but the government says nothing is working. Of course, low birth rates are a huge problem in many countries, from other Scandinavian nations to Russia, China, most of Europe, Japan – indeed almost everywhere but in Africa. The US has an issue, but not nearly as bad as many others. To understand the scope of this problem, in other news this week it was reported that the number of Japanese aged over 90 has passed two million for the first time. The figure has doubled from 1.02 million in 2004 to 2.06 million. Meanwhile, the Japanese birth rate is falling at the same time. The country's current population of 127 million is expected to decline by nearly 40 million by 2065. They say "demography is destiny," and this is certainly some very scary stuff.



That was the figure for the August index of manufacturing output , the US monthly measure from the Federal Reserve. That was down 0.3 percent from August, as Hurricane Harvey had some impact on the measure. "Storm-related effects appear to have reduced the rate of change in factory output in August about 3/4 percentage point," the Fed observed, meaning the index would have been up instead of down without the natural disaster. Output in August was up a decent 1.5% from August 2016. That was the good news. The bad news is that at a level of 103.3, it means US manufacturing output is just up 3.3% versus the baseline year of 2012, meaning annual growth of well under 1%, as we have reported many times before. Despite some up and downs, manufacturing output basically been flat for the past year or more, in a worrisome sign.


1 Million

That's the size of a new fulfillment center planned by Amazon near Mexico City, as the on-line giant makes aggressive moves to build its business south of the US border. Expected to be completed next year, the facility would double Amazon's distribution space in Mexico, adding to the 500,000 square feet or so it has with the two existing FCs in the country, both in the same general area as the planned new facility, near a metro area with some 20 million people. Amazon was a bit slow to target Mexico in a big way, years behind Walmart as it just started selling merchandise there two years ago, but it is now growing much faster there than Walmart is, abeit from a lower base. Amazon posted $253 million in sales in Mexico last year, more than double the year before. Some believe Amazon is racing to beef up its Mexican presence before Chinese rival Alibaba shows up in a big way. While adding to its direct presence in the country, Amazon is said to be hoping that NAFTA negotiations under way persuade Mexico to raise the current $50 limit on the value of on-line purchases that can be imported into the country duty-free.



That is upward end of the now revised forecast for growth in 2017 in US retail sales from the National Retail Federation (NRF). The NRF now projects retail sales for 2017 are expected to increase between 3.2% and 3.8%, down from the 3.7%-4.2% growth range the NRF predicted earlier this year. The revision comes after the Census Bureau lowered its retail sales figures, and the Bureau of Economic Analysis downgraded its personal income and consumption numbers. The NRF notes that retail sales as it calculates them - excluding automobiles, gasoline stations and restaurants - have increased year-over-year in all but one month since the beginning of 2010. The NRF forecasts and past results include inflation, so "real" growth would be somewhat lower, though inflation has been tame. In better news for the economy, accounting firm Deloitte said it expects US holiday sales to grow a strong 4-4.5% versus 2016. Deloitte also predicts ecommerce will only take about 11% of total holiday sales of about $1.04 trillion. The NRF has a much higher percent of ecommerce's share, but that may be the result of different definitions of retail sales. Analytics firm RetailNext forecasts 3.8% growth in holiday sales, while consulting firm AlixPartners this week forecast holiday sales to grow 3.5-4.4%. The NRF has not yet issued its holiday sales forecast, which must be coming soon.