Monday: Personal Income and Outlays, ISM Mfg Index, Construction Spending

From Jim Hamilton at Econbrowser: Current economic conditions: not as bad as it sounds

The new BEA data also allow us to calculate an alternative estimate of GDP, building the estimate up from income data instead of expenditures. In terms of the underlying concepts, the income-based and expenditure-based calculations should produce the identical number for GDP. But because the data sources are different, in practice the two estimates differ, with the difference officially reported as a “statistical discrepancy.” While the expenditure-based GDP estimate showed a 0.7% decline at an annual rate, the income-based GDP estimate implied 1.4% growth for the first quarter. Moreover, using the statistical method for reconciling and combining the different estimates proposed by Aruoba, Diebold, Nalewaik, Schorfheide, and Song (ADNSS), the best estimate of first-quarter real GDP growth based on the existing data might be about 2%.

No worries.

Monday:
• At 8:30 AM ET, Personal Income and Outlays for April. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• At 10:00 AM, ISM Manufacturing Index for May. The consensus is for an increase to 51.8 from 51.5 in April. The ISM manufacturing index indicated expansion at 51.5% in April. The employment index was at 48.3%, and the new orders index was at 53.5%.

• Also at 10:00 AM, Construction Spending for April. The consensus is for a 0.7% increase in construction spending.

Weekend:
• Schedule for Week of May 31, 2015

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are up 3 and DOW futures are up 36 (fair value).

Oil prices were down over the last week with WTI futures at $59.97 per barrel and Brent at $65.19 per barrel.  A year ago, WTI was at $103, and Brent was at $108 - so, even with the recent increases, prices are down 40%+ year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are up to $2.75 per gallon (down about $0.90 per gallon from a year ago).

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

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Marisa Sargent, Joshua Bernhardt

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Schedule for Week of May 31, 2015

The key report this week is the May employment report on Friday.

Other key indicators include the April Personal Income and Outlays report on Thursday, May ISM manufacturing index on Friday, May vehicle sales on Friday, April Trade Deficit on Tuesday, and the May ISM non-manufacturing index also on Tuesday.

----- Monday, June 1st -----
8:30 AM ET: Personal Income and Outlays for April. The consensus is for a 0.3% increase in personal income, and for a 0.2% increase in personal spending. And for the Core PCE price index to increase 0.2%.

10:00 AM: ISM Manufacturing Index for May. The consensus is for an increase to 51.8 from 51.5 in April.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 51.5% in April. The employment index was at 48.3%, and the new orders index was at 53.5%.

10:00 AM: Construction Spending for April. The consensus is for a 0.7% increase in construction spending.

----- Tuesday, June 2nd -----
All day: Light vehicle sales for May. The consensus is for light vehicle sales to increase to 17.0 million SAAR in May from 16.5 million in April (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the April sales rate.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for April. The consensus is a 0.1% decrease in orders.

----- Wednesday, June 3rd -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for May. This report is for private payrolls only (no government). The consensus is for 200,000 payroll jobs added in May, up from 169,000 in April.

8:30 AM: Trade Balance report for April from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through March. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $43.9 billion in April from $51.4 billion in March. Note: The trade deficit increased sharply in March after the West Coast port slowdown was resolved in February.  The deficit should decline significantly in April.

10:00 AM: the ISM non-Manufacturing Index for April. The consensus is for index to decrease to 57.2 from 57.8 in April.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, June 4th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 276 thousand from 282 thousand.

8:30 AM: Productivity and Costs for Q1. The consensus is for a 6.0% increase in unit labor costs.

----- Friday, June 5th -----
8:30 AM: Employment Report for May. The consensus is for an increase of 220,000 non-farm payroll jobs added in May, up from the 213,000 non-farm payroll jobs added in April.

The consensus is for the unemployment rate be unchanged at 5.4%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In April, the year-over-year change was just under 3.0 million jobs.

As always, a key will be the change in real wages - and as the unemployment rate falls, wage growth should pickup.

3:00 PM: Consumer Credit for March from the Federal Reserve. The consensus is for an increase of $16.0 billion in credit.



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Philly Fed: State Coincident Indexes increased in 40 states in April

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2015. In the past month, the indexes increased in 40 states, decreased in six, and remained stable in four, for a one-month diffusion index of 68. Over the past three months, the indexes increased in 45 states, decreased in three, and remained stable in two, for a three-month diffusion index of 84.

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In April, 43 states had increasing activity (including minor increases).

It appears we are seeing weakness in several oil producing states including Alaska, North Dakota and Oklahoma. It wouldn't be surprising if Texas and other oil producing states also turned red sometime this year.


Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is almost all green again.

Note: Blue added for Red/Green issues.

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Seasonal demand fails to spark fluorspar price rises

Price review: Despite stability in demand acidspar prices continue to remain fragile in a buyer-driven market; while metspar producers fear sluggish demand.

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SRM: More Than A Warm Fuzzy Feeling

One key question that caught my attention from recent discussions is how procurement will approach supplier relationship management (SRM) as cost pressure increases and certain markets continue to shift in favour of suppliers.

After a hectic and insightful few days at the World Procurement Congress, it makes sense to look at a few of the points that really stood out from the discussions. One key question that caught my attention is how procurement will approach supplier relationship management (SRM) as cost pressure increases and certain markets continue to shift in favour of suppliers.

I was lucky enough to be able to observe a lively roundtable regarding this very topic. The roundtable was titled ‘SRM: How to get more from your suppliers’ and below are three key points from the session that are important for the procurement community to know as it maps the future.

 

· Often suppliers know more about you than you know about them. In light of this slightly menacing statement, the importance of market intelligence was again underscored as a key tool required by the function to face SRM. Obtaining quality market intelligence will allow buyers to engage more effectively with the supply base.

 

· The definition and communication of supplier strategy was thought by the session’s participants to be an area of SRM which is currently seeing under-performance. The main goals and priorities of procurement teams in regard to their engagement with strategic suppliers are often not formally defined and written down. Not having a clear strategy clearly impedes a team’s ability to draw the best result from a relationship. The head of procurement for Sony also stated that communicating with suppliers about what the procurement team is trying to achieve can facilitate great collaborative power.

 

· SME suppliers will become an increasingly significant portion of the supply base. This is because SMEs are able to offer higher levels of flexibility and are now becoming the main source of industry innovation. As a result, going forward procurement will need to find more effective ways of engaging and working with SMEs in order to get the most out of their supply base.   

For those in attendance, SRM is one of those issues where there is always room to improve and to drive value. Those taking part in these discussions will undoubtedly have their own views on how to develop capablities and hone their strategies, but there’s no question that there’s shared territory here and businesses that are willing to focus and invest in a carefully planned approach to SRM are able to realise measurable returns and not just a warm feeling from suppliers. 

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Q1 GDP Revised Down to -0.7% Annual Rate

From the BEA: Gross Domestic Product: First Quarter 2015 (Second Estimate)

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- decreased at an annual rate of 0.7 percent in the first quarter of 2015, according to the "second" estimate released by the Bureau of Economic Analysis. ...

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, real GDP increased 0.2 percent. With the second estimate for the first quarter, imports increased more and private inventory investment increased less than previously estimated ...
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised down from 1.9% to 1.8%. Residential investment was revised up from 1.3% to 5.0%.

Net exports was revised down, private inventory investment was revised down, and government was revised down (from -0.8% to -1.1%).

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Price Briefing 22 – 28 May

India cuts barite tender price; Chinese tax hurts rare earths and lithium gets a boost from short supply.

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Lithium hydroxide prices edge up on tighter supply

Sources confirm less material available in the market; lithium carbonate prices remain stable.

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Review: ‘The True Cost’ Investigates High Price of Fashion Bargains

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IM Prices 2015

Low well completion rates hit frac sand volumes, oil prices still down 50% on June 2014 and fire sales slash cost of ceramic proppants. In Bentonite meanwhile, producers are standing firm over offers. A diverse application base shields industry, while cat litter is now clay’s main market driver.

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Slowing downstream consumption pushes upriver for minerals

Potash producers secure higher contract prices; TiO2 outlook still offers little cheer for feedstocks; refractory minerals mixed on steel

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Panel Debate: Creating A Diverse Senior Leadership Team #wpc

Three key takeaways from a panel discussion on the value of diversity in procurement

The last session of day one of the WPC covered an issue that was perhaps the most emotive and contentious of the day; how creating a diverse senior leadership team can deliver a new value proposition. The panel discussed the issue and what it means to them, all agreeing just how essential a diverse leadership team is to the success of any organisation.  

Diversity means very different things to different organisations in different locations, it is important to assess what it means for your business and whether you want to address it.

The panel highlighted just how varied diversity is even in its definition. One panellist, for instance, commented that a North American client used the term “diversity” to refer to females and Europeans.

From gender to geographical differences, “diversity” will vary across organisations and business will need to truly recognise what this means for them if they are to benefit from utilising it.

All panelists agreed that businesses would be foolish to ignore diversity. Caroline Booth, CPO from TD Bank summed it up when she stated “Diversity of thought is incredibly important” for successful organisations.

However, businesses need to be sure of the reasons for why they are addressing it, “if diversity is just the flavour of the month,” Dapo Ajayi, CPO Astrazeneca commented, “employees will see through it” and ultimately it will not be successful.

Leaders need to have the right mind-set and advocate diversity themselves personally as well as through offering development opportunities for those potentially affected.

Once an organisation has a clear understanding of what diversity truly means for them and what they want to do about it leadership buy-in is essential.

“Diversity is not a recruitment issue, it is a leadership issue, it is a cultural issue,” Heidi Hoffman, Head of SCM for Korn Ferry noted.

Creating the right development infrastructure for employees who are affected is imperative. The panelists discussed how development and training is key, with Booth discussing initiatives at TD Bank such as Taking the Stage programme for female employees.

Ageism affects procurement and works both ways – too young and too old. It is essential to value people for their talent rather than anything else.

One key topic discussed by the panel was that of age. The new generation of employees, or millennials, have impacted the function, and procurement will need to accommodate this diversity to stay relevant. “Millennials will replace the old leadership, but it’s good to challenge the status quo” commented Dapo Ajayi.

On the other hand, the population’s average age is increasing, creating another issue for those hiring new talent to consider if teams are to remain diverse. Ultimately, the importance of valuing people for their talent, skills and attitude rather than their age.

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Centrica Group Procurement Director David Wylie: Creating an Engaged Indirect Function #wpc

Driving procurement forward with understanding and communication of strategic value

Centrica group procurement director, David Wylie, took to the stage this morning to offer insight into how procurement in his organisation is taking the indirect function forward. A brief lesson on Victorian London’s history of crime and punishment preceded, and fed nicely into, an insightful discussion on the evolution of procurement beyond a process function, to one of real value to the business. 

The days of ’cranking the handle’ are dead: CPOs and their teams need to move beyond process and focus on people

Often, according to Wylie, "procurement teams hit the wall they build themselves". The ability to move beyond the most basic aspects of the function’s remit depends on its progress in the value chain, but shaking the label of business ’conformer’ - doing what is asked - to one of business ’educator’ - communicating the position of the function as expert - is essential to raising procurement’s profile. 

Procurement’s right to exist depends on its ability to deliver strategic value, beyond cost reduction, to the wider organisation

It really isn’t all about savings. The notion errs dangerously close to exhuastion at times, but its lip-service-like associations were quickly dispelled by Wylie, who explained that it’s up to procurement to consider what its real value proposition is, and then how it is messaging that value. This means not being afraid to challenge conventional wisdom; for example, questioning the extent to which ever-increasing annual savings, achieved until the very end of the contract, are actually a good thing. Surely, getting the best deal possible means picking off savings earlier on, to the point where there are none left come contract-end. 

Speak the language of the business: the best way to engage internal customers is to communicate real insight in an effective way

’Did you know...?’ are the three most important words in procurement’s vernacular, says Wylie. The function has to be a challenger, delivering real insight into supply markets, which must of course be anchored in an undertsanding of wider organisational goals and objectives.

"No one should know our supply markets better than the procurement function", he went on to say. Delivering what Wylie calls "relentless insight" is central; sucking in supply market intelligence across categories and in a joined-up way, and meshing this with internal knowledge is central to embedding procurement expertise in the business. While information is great, however, it’s nothing without insight. Without the ability to communicate with stakeholders in a meaningful way, the function will never get the buy-in it needs to move forward. 

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Embedding supplier sustainability into your procurement DNA #wpc

Three key takeaways on the challenges of embedding sustainability in procurement processes

Sustainability is becoming increasingly important for procurement teams to get to grips with as consumers demand to know more about the sustainability of the product. “If we aren’t focused on this in our company we are going to be behind” Shelley Stewart, CPO of Dupont commented. Stewart walked the audience through how their business has tackled the challenge of embedding sustainability into procurement processes on a global scale.

Internal communication is key when ensuring a sustainable procurement process

Stewart noted the importance of coming to a definition of what sustainability means for the business before bringing about any changes. Once an understanding of what it means and where in the value chain it will impact is reached then internal communication is key.

For any sized organisation, however, resistance to change is likely to some degree. For Dupont, communicating that sustainability was linked to risk and that not addressing this issue would negatively impact the value chain was a powerful motivator.

Collaborating with suppliers and seeking an external perspective is of paramount importance

Once an internal understanding and buy-in for sustainability has been reached, Stewart noted the importance of seeking an external perspective and working with suppliers to achieve targets.

Partnering with suppliers and learning from their sustainability practises is key for progression. Furthermore, creating a discussion between suppliers who are advanced in their sustainability practises and those who are weaker creates a unified approach to driving sustainability past tier one.

Putting the programme into practise requires a repeated and unified message to the business and suppliers alike

To ensure sustainability keeps at the forefront of procurement practises, a clear and unified message is imperative. However “one size doesn’t fit all” for embedding sustainability processes across a global organisation. Policies have to be flexible to accommodate different businesses.

Along with learning from and collaborating with suppliers, ensuring a clear and consolidated message is communicated to each supplier will drive the sustainability programme through the value chain. At Dupont, suppliers are given Core Value Contacts and a Supplier Code of Conduct.

Embedding sustainability into the supply chain is an on-going process, however, and needs to be continually assessed and improved, with Stewart stating “sustainability is a mindset, not a checklist.”

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Panel Debate: Harnessing the Power of the Web #wpc

Three key takeaways from CPO discussion on the impact of internet technologies on critical procurement activities

A diverse panel sat down to discuss the impact that the internet is having on business and sourcing practices, with industry leaders representing the food and beverage, professional services and telecommunications sectors. The panel agreed, unsurprisingly, that the internet has fundamentally changed the way both professionals and consumers interact with products and suppliers, and procurement’s ability to leverage the power of the web so far, as well as how this will evolve into the future, provided the focus for the discussion. 

Procurement is yet to fully leverage the power of the internet and its impact on buying

Valerie Therond, senior vice president (SVP), Orange, kicked off the discussion with an interesting paradox: procurement, while arguably the forerunner in internet-enabled purchasing, has struggled to keep pace with developments in the consumer space over the course of the last two decades. The panelists agreed that procurement is yet to realise any fundamental change in the way it buys products and services as a result of web technology. 

Big data is helping buyers to gather and collate an ever-more expansive set of data. Importantly, this gives teams a greater depth of undertsnading, or, rather, it gives them the tools to develop a deeper understanding. The problem with all of this data is how to integrate and drive greater value from it. From a technology sourcing perspective, procurement needs to work out how to get closer to the supply base - how to bring the various partnerships together - in order to unearth innovations and move beyond ’siloed’ relationships. 

CPOs need generalists, rather than technology experts, on their teams who understand and can contribute to stakeholder dialougue

The technical background developed over the last two decades - prevalent among many a procurement team, beit in engineering or other fields - needs to be evolved in order to envelope an understanding of information technology. The understanding needs to be thorough, but that does not mean hiring a team of technology experts. Procurement needs to be able to communicate with technology stakeholders on their level, but generalists with project management and well-honed buying skills are earmarked as especially valuable to the function, more so than specific subject-matter experts. 

e-commerce will not be all consuming - certain categories will always be driven by metrics that cannot be commoditised 

The panel mused on the future role of buyers themselves. The speakers asked: "will negotatiation be all that’s left for buyer?" Or, dialectically, "will it even be needed?" Ultimately, it was agreed that the ability to negotiate will always be important, regardless of the extent to which internet technologies permiate sourcing practices, because category price variance remains high, and as long as value continues to be created in the supply chain, margin will be there to exploit. Similarly, though, it will never be feasible to commoditise all categories in the way booking.com has for travel, for instance. If all that’s left is negotiation, where does the leverage for SRM or sustainability or innovation come from? It’s not all about bang for the buck. 

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Technology Trends Poised To Shake-Up Procurement #wpc

3d printing, virtual reality, augmented reality, the Internet of Things, and crypto-currencies are disrupting both the consumer and business worlds, but what impact is this having on procurement and their supply chains. 

Technology is developing at an astonishing rate, David Rowan, editor of Wired magazine, told delegates on day two of the World Procurement Congress, and this is starting to disrupt the way businesses and their procurement teams operate. 

There are, he said, opportunities here but also risks, which if not addressed will end up costing the business. 

Rapid pace of development

Rowan started by asking the audience whether they thought they would be buying flying cars within the next ten years. While only a few hands went up he then showed a video of a flying car that exists today to a few shocked laughs from the audience. 

He said that development of technology in the last century had been relatively slow and linear, but that this century it was developing quickly and constantly.

While this makes it hard for procurement to know what to focus on there are a few technologies that will be sure to shape the function. The Internet of Things, where everything is connected and feeding data back, will give the function another layer of information about its supply chain and the products it is producing. But it will also provide more information on how customers are using products.   

Don’t fear this change, embrace it

He was quick to add that this change shouldn’t be feared, instead it should be embraced.

Companies that don’t embrace this will be left behind and won’t be able to reap the rewards that can be seized. Companies like General Electric are already embracing such efforts, giving its IP to a start-up and telling them to see what innovations they could come up with.   

The business risk

Rowan’s biggest fear with all this new technology was the risk of cyber attacks. With everything connected, the risk factor is increased. But failure to invest in the technologies that will protect against such things will result in a damaged reputation and potentially costs through fines.

The smaller companies are those at most risk so it is essential to investigate your supply chain to ensure that there can be no piggy-back attacks through them to you. 

Stay up to date on the live blog, or on Twitter, using #WPC.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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Panel Debate: Creating a diverse senior leadership team #wpc

Three key takeaways from a panel discussion on the value of diversity in procurement

The last session of day one of the WPC covered an issue that was perhaps the most emotive and contentious of the day; how creating a diverse senior leadership team can deliver a new value proposition. The panel discussed the issue and what it means to them, all agreeing just how essential a diverse leadership team is to the success of any organisation.  

Diversity means very different things to different organisations in different locations, it is important to assess what it means for your business and whether you want to address it.

The panel highlighted just how varied diversity is even in its definition. One panellist, for instance, commented that a North American client used the term “diversity” to refer to females and Europeans.

From gender to geographical differences, “diversity” will vary across organisations and business will need to truly recognise what this means for them if they are to benefit from utilising it.

All panelists agreed that businesses would be foolish to ignore diversity. Caroline Booth, CPO from TD Bank summed it up when she stated “Diversity of thought is incredibly important” for successful organisations.

However, businesses need to be sure of the reasons for why they are addressing it, “if diversity is just the flavour of the month,” Dapo Ajayi, CPO Astrazeneca commented, “employees will see through it” and ultimately it will not be successful.

Leaders need to have the right mind-set and advocate diversity themselves personally as well as through offering development opportunities for those potentially affected.

Once an organisation has a clear understanding of what diversity truly means for them and what they want to do about it leadership buy-in is essential.

“Diversity is not a recruitment issue, it is a leadership issue, it is a cultural issue,” Heidi Hoffman, Head of SCM for Korn Ferry noted.

Creating the right development infrastructure for employees who are affected is imperative. The panelists discussed how development and training is key, with Booth discussing initiatives at TD Bank such as Taking the Stage programme for female employees.

Ageism affects procurement and works both ways – too young and too old. It is essential to value people for their talent rather than anything else.

One key topic discussed by the panel was that of age. The new generation of employees, or millennials, have impacted the function, and procurement will need to accommodate this diversity to stay relevant. “Millennials will replace the old leadership, but it’s good to challenge the status quo” commented Dapo Ajayi.

On the other hand, the population’s average age is increasing, creating another issue for those hiring new talent to consider if teams are to remain diverse. Ultimately, the importance of valuing people for their talent, skills and attitude rather than their age.

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Zillow Forecast: Expect Case-Shiller National House Price Index up 4.0% year-over-year change in April

The Case-Shiller house price indexes for March were released this yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Zillow: Expect More of the Same from Case-Shiller in April

The March S&P/Case-Shiller (SPCS) data published [yesterday] showed home prices continuing to appreciate at around 5 percent annually for both the 10- and 20- City Indices, and roughly 4 percent for the national index. March marks the seventh consecutive month in which the national home price index has appreciated at a less than 5 percent annual appreciation rate (seasonally adjusted).

In March, the 10-City Index appreciated at an annual rate of 4.7 percent, compared to 5.0 percent for the 20-City Index (SA). The non-seasonally adjusted (NSA) 10-City Index was up 0.8 percent month-over-month, while the 20-City index rose 0.9 percent (NSA) from February to March. We expect the change from March to April to show increases of more than 1 percent (NSA) for both the 10- and 20- City Indices.

All forecasts are shown in the table below. These forecasts are based on the March SPCS data release and the April 2015 Zillow Home Value Index (ZHVI), published May 21. Officially, the SPCS Composite Home Price Indices for March will not be released until Tuesday, June 30.

So the year-over-year change in for April Case-Shiller National index will be about the same as in the March report.

Zillow Case-Shiller Forecast
	Case-Shiller Composite 10		Case-Shiller Composite 20		Case-Shiller National
	NSA	SA	NSA	SA	NSA	SA
March Actual YoY	4.7%	4.7%	5.0%	5.0%	4.1%	4.1%
April Forecast YoY	4.9%	4.9%	5.2%	5.2%	4.0%	4.0%
April Forecast MoM	1.2%	0.5%	1.3%	0.6%	1.0%	0.0%

From Zillow:

Annual appreciation in the Zillow Home Value Index (ZHVI) peaked in April 2014 and has declined since then. In April, the U.S. ZHVI rose 3 percent year-over-year, one percentage point lower than the annual change in rents (4 percent). The April Zillow Home Value Forecast calls for a 2 percent rise in home values through April 2016. Further details on our forecast of home values can be found here.

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Tax reforms fail to boost Chinese rare earths market

China’s new resource tax system raises mine gate prices for rare earths but has done nothing to boost market selling values, meaning that downstream companies, which are already burdened by overcapacity and weak demand, are coming under even more pressure.

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Panel Debate: Harnessing the Power of the Web #wpc

Three key takeaways from a CPO discussion on the impact of internet technologies on critical procurement activities

A diverse panel sat down to discuss the impact that the internet is having on business and sourcing practices, with industry leaders representing the food and beverage, professional services and telecommunications sectors. The panel agreed, unsurprisingly, that the internet has fundamentally changed the way both professionals and consumers interact with products and suppliers, and procurement’s ability to leverage the power of the web so far, as well as how this will evolve into the future, provided the focus for the discussion. 

Procurement is yet to fully leverage the power of the internet and its impact on buying

Valerie Therond, senior vice president (SVP), Orange, kicked off the discussion with an interesting paradox: procurement, while arguably the forerunner in internet-enabled purchasing, has struggled to keep pace with developments in the consumer space over the course of the last two decades. The panelists agreed that procurement is yet to realise any fundamental change in the way it buys products and services as a result of web technology. 

Big data is helping buyers to gather and collate an ever-more expansive set of data. Importantly, this gives teams a greater depth of undertsnading, or, rather, it gives them the tools to develop a deeper understanding. The problem with all of this data is how to integrate and drive greater value from it. From a technology sourcing perspective, procurement needs to work out how to get closer to the supply base - how to bring the various partnerships together - in order to unearth innovations and move beyond ’siloed’ relationships. 

CPOs need generalists, rather than technology experts, on their teams who understand and can contribute to stakeholder dialougue

The technical background developed over the last two decades - prevalent among many a procurement team, beit in engineering or other fields - needs to be evolved in order to envelope an understanding of information technology. The understanding needs to be thorough, but that does not mean hiring a team of technology experts. Procurement needs to be able to communicate with technology stakeholders on their level, but generalists with project management and well-honed buying skills are earmarked as especially valuable to the function, more so than specific subject-matter experts. 

e-commerce will not be all consuming - certain categories will always be driven by metrics that cannot be commoditised 

The panel mused on the future role of buyers themselves. The speakers asked: "will negotatiation be all that’s left for buyer?" Or, dialectically, "will it even be needed?" Ultimately, it was agreed that the ability to negotiate will always be important, regardless of the extent to which internet technologies permiate sourcing practices, because category price variance remains high, and as long as value continues to be created in the supply chain, margin will be there to exploit. Similarly, though, it will never be feasible to commoditise all categories in the way booking.com has for travel, for instance. If all that’s left is negotiation, where does the leverage for SRM or sustainability or innovation come from? It’s not all about bang for the buck. 

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Capturing Value Beyond Savings #wpc

Savings have always been procurement’s main focus but with the business demanding more value where is the function looking for this and how is it measuring it.

Every procurement team is measured by the savings they make, but the business is increasingly demanding that they deliver value beyond just cold, hard cash. Where to look and how to measure that is key to success here, but as a CPO panel debate, hosted by GEP, at the World Procurement Congress in London concluded, procurement will always be ultimately judged on savings.

Capturing savings is the fundamental role of procurement and always will be

Matthew Bardell, VP at GEP, kicked off the debate saying that "savings are the fundamental role procurement", but added that the function is now being tasked with deliver value in other areas.

The panel of CPOs, which included Thibaut Eissautier of Diageo, Clive Rees of Fujitsu and Fried Walter-Muenstermann of BASF, nodded in agreement with Bardell’s initial sentiment but told those delegates gathered that there are many areas of value for the function to look at.

Fujitsu’s Rees was one panel member who was keen to stress the importance of his savings targets saying that he thinks about it all day every day. He added that he and his team would never move completely away from savings because it is what gives his team credibility. 

Value can be delivered by through sustainability, supplier enabled innovation and talent management.

Eissautier started by saying that it was important to be focused on the areas in which you want to capture value. He said that at Diageo they focus on four goals - best cost, end-to-end value, innovative solutions and sustainability.

Fujitsu’s Clive Rees said that he and his team were looking to supplier enabled innovation to deliver this value and was currently working with suppliers to enhance their relationships.  

BASF’s Walter-Munstermann said that sustainability was one area that his team was looking, and finding, value.

Measuring value can take many forms

Value can sometimes be intangible to try and measure, but it is of vital importance for procurement to find a way to measure what it is achieving.  

BASF’s Walter-Munstermann told delegates that he has scorecards to measure what his team are adding, which are linked to the overall corporate strategy. Those achievements are also measured by his respective business partner rather than just in finance specifically.

Diageo’s Eissautier said that he uses capability frameworks. These take into account scale in terms of percentage spend with certain suppliers, turnover linked to supplier innovations and the percentage of the team that are continually moving round into different roles.  

Stay up to date on the live blog, or on Twitter, using #WPC. 

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

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Qantas CPO Jane Harley: Building procurement capability through transformation #wpc

Qantas recently went through a major business transformation to be able to compete in the competitive airline industry. In her keynote at the WPC in London, CPO Jane Harley talked about how she and her procurement team supported the business throughout this challenging time.

Quantas is not only Australia’s largest airline, but also a company that operates in a low-margin industry where cost is constantly top of mind. In order to maintain and ensure air competitiveness, the company had to embark on a major business transformation in 2013/2014. Jane Harley, the company’s CPO and artist in her spare time, talked about how she managed to develop and nurture good procurement talent during this crucial time.

• Collaboration is key to transformation. A centre-led procurement organisation, Harley and her team had to come to a definition of value first. “There is a difference between what ‘good’ and what ‘great’ means,” Harley highlighted. “It can be anything from cost savings, operational improvement, all the way to revenue generation.” Once this definition was established, Harley and her team sat down with their business partners to understand their needs and as part of that, they came to understand what they were mostly interested in: for procurement to work alongside them, to take ownership, and to deliver to their timeline. This collaboration effort also took place in a more physical sense with procurement hot-desking with its business partners and changing the business language (to reinforce positive outcomes).

• Always transform to be agile (not to a certain situation). As part of the transformation journey, Harley made it a priority to streamline processes by agreeing on what is most important (and yet simple) first, and then educating business partners on these changes. Once critical outcome was the first ever category council which was established in 2013.

 

• Invest in building capabilities beyond procurement because procurement is a business skill. Harley invested in a range of talent development activities by ensuring the basics are covered. But equally important, she made it a point to complement technical skills with building managerial responsibilities.  “Throughout this transformation, as challenging as it was, we were able to retain our talent, and it was because we were able to offer diverse and impactful development opportunities,” Harley concluded.

Qantas’ transformation has resulted in a range of operational improvements and customer service innovations (such as seasonal flying, partnering with Emirates and expanding its hub footprint, as well as introducing a more effective and higher-quality meal service). And Harley now observes three behaviours in her talent: 1) passion for the business, 2) the drive to achieve results, and 3) curiosity.

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Nestle CPO Goncalves: Procurement in action #wpc

Marco Goncalves, CPO at Nestle, as well as football goalkeeper, provided us some of his lessons on keeping procurement in the game.

Marco Goncalves, CPO at Nestle, as well as football goalkeeper, provided us some of his lessons on keeping procurement in the game. After a 30-year career in procurement, Goncalves provided some key lessons to the World Procurement Congress in London to place the purchasing function at the centre of the business.

Understand the business deeply and anticipate changing plans

“The company defines its business plans between three and ten years,” Goncalves notes. “As procurement, we need to be extremely well connected to the business to understand these plans, as well as anticipate changes of demand in the future. Nestle’s procurement team employs a specialist group of buyers to ensure that purchasing plans are aligned with the business. In respect of innovation, for instance, Nestle ensures that every innovation project has a procurement person embedded into the team. As for early involvement, Goncalves defined this as “as soon as the project starts.”

Understand the supply chain and extend influence to lower tiers

Given the agricultural nature of many of Nestle purchasing, the value chain can be highly fragmented and complicated. Yet, the organisation is trying to reach deeper into the value chain to unlock value and enhance visibility.  “The upstream value chain is extremely complex,” Goncalves told the WPC. “You can’t do this alone. You have to use all of your suppliers and all of your tiers: not just the first suppliers.”

Trust is key – both inside the business and externally

Trust is one of procurement’s key resources. In respect of internal stakeholders, in that they trust buyers’ ability to deliver on their promises. But also, and most crucially as the function grows in importance, in representing the company’s supply chain to the consumer level. “We sell 1 billion products every day, if the consumer trust isn’t there, we’re not going to deliver this.” As the general public becomes more away of supply chains, they want to know more information about them and have assurance that the manufacturing organisation is acting ethically and transparently.

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Real Prices and Price-to-Rent Ratio in March

The expected slowdown in year-over-year price increases has occurred. In October 2013, the National index was up 10.9% year-over-year (YoY). In March 2015, the index was up 4.1% YoY.  However the YoY change has only declined slightly over the last six months.

As I've noted before, I think most of the slowdown on a YoY basis is now behind us (I don't expect price to go negative this year). This slowdown in price increases was expected by several key analysts, and I think it was good news for housing and the economy.

In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $274,000 today adjusted for inflation (37%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation).

It has been almost ten years since the bubble peak.  In the Case-Shiller release this morning, the National Index was reported as being 7.6% below the bubble peak.   However, in real terms, the National index is still about 21% below the bubble peak.

Nominal House Prices

The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through March) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) is back to June 2005 levels, and the Case-Shiller Composite 20 Index (SA) is back to February 2005 levels, and the CoreLogic index (NSA) is back to March 2005.

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to June 2003 levels, the Composite 20 index is back to May 2003, and the CoreLogic index back to July 2003.

In real terms, house prices are back to 2003 levels.

Note: CPI less Shelter is down 1.5% year-over-year, so this is pushing up real prices.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to May 2003 levels, the Composite 20 index is back to March 2003 levels, and the CoreLogic index is back to June 2003.

In real terms, and as a price-to-rent ratio, prices are mostly back to 2003 levels - and the price-to-rent ratio maybe moving a little sideways now.

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Case-Shiller: National House Price Index increased 4.1% year-over-year in March

S&P/Case-Shiller released the monthly Home Price Indices for March ("March" is a 3 month average of January, February and March prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: Home Price Gains Accelerate, Led by San Francisco and Denver According to the S&P/Case-Shiller Home Price Indices

Data released today for March 2015 show that home prices continued their rise across the country over the last 12 months. ... Both the 10-City and 20-City Composites saw year-over-year increases in March. The 10-City Composite gained 4.7% year-over-year, while the 20-City Composite gained 5.0% year-over-year. The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 4.1% annual gain in March 2015 versus a 4.2% increase in February 2015.
...
The National index increased again in March with a 0.8% increase for the month. Both the 10- and 20-City Composites increased significantly, reporting 0.8% and 0.9% month-over-month increases, respectively. Of the 19 cities reporting increases, San Francisco led all cities with an increase of 3.0%. Seattle followed next with a reported increase of 2.3%. Cleveland reported an increase of 0.4%, its first positive month-over-month increase since August 2014. New York was the only city to report a negative month-over-month change with a -0.1% decrease for March 2015.
...
“Home prices have enjoyed year-over-year gains for 35 consecutive months,” says David M. Blitzer, Managing Director & Chairman of the Index Committee for S&P Dow Jones Indices. “The pattern of consistent gains is national and seen across all 20 cities covered by the S&P/Case-Shiller Home Price Indices. The longest run of gains is in Detroit at 45 months, the shortest is New York with 27 months. However, the pace has moderated in the last year; from August 2013 to February 2014, the national index gained more than 10% year-over-year, compared to 4.1% in this release.

“Given the long stretch of strong reports, it is no surprise that people are asking if we’re in a new home price bubble. The only way you can be sure of a bubble is looking back after it’s over. The average 12 month rise in inflation adjusted home prices since 1975 is about 1.0% per year compared to the current 4.1% pace, arguing for a bubble. However, the annual rate of increase halved in the last year, as shown in the first chart. Home prices are currently rising more quickly than either per capita personal income (3.1%) or wages (2.2%), narrowing the pool of future home-buyers. All of this suggests that some future moderation in home prices gains is likely. Moreover, consumer debt levels seem to be manageable. I would describe this as a rebound in home prices, not bubble and not a reason to be fearful.”
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 14.2% from the peak, and up 0.9% in March (SA).

The Composite 20 index is off 13.1% from the peak, and up 0.9% (SA) in March.

The National index is off 7.6% from the peak, and up 0.1% (SA) in March.  The National index is up 24.7% from the post-bubble low set in December 2011 (SA).

The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 4.7% compared to March 2014.

The Composite 20 SA is up 5.0% year-over-year..

The National index SA is up 4.1% year-over-year.

Prices increased (SA) in all 20 of the 20 Case-Shiller cities in March seasonally adjusted.  (Prices increased in 19 of the 20 cities NSA)  Prices in Las Vegas are off 40.6% from the peak, and prices in Denver and Dallas are at new highs (SA).

The last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.

As an example, at the peak, prices in Phoenix were 127% above the January 2000 level. Then prices in Phoenix fell slightly below the January 2000 level, and are now up 50% above January 2000 (50% nominal gain in 15 years).

These are nominal prices, and real prices (adjusted for inflation) are up about 40% since January 2000 - so the increase in Phoenix from January 2000 until now is about 10% above the change in overall prices due to inflation.

Two cities - Denver (up 65% since Jan 2000) and Dallas (up 48% since Jan 2000) - are above the bubble highs (a few other Case-Shiller Comp 20 city are close - Boston and, Charlotte).    Detroit prices are still below the January 2000 level.

This was close to the consensus forecast. I'll have more on house prices later.

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Expect A 'Blurring Of Lines' In The End-To-End Supply Chain #mapthefuture

Ahead of the World Procurement Congress, Procurement Leaders speaks to event chair Cynthia Dautrich, CPO Kimberly-Clark about the future of the function and the direction of her function. 

Ahead of the World Procurement Congress this week, Procurement Leaders spoke to event chair Cynthia Dautrich, CPO Kimberly-Clark. With the theme of the Congress being ‘Mapping the future’, we asked her what she saw as the key issues for the community and her function as she looked to the year ahead.

Procurement Leaders (PL): Looking broadly, what issues do you see dominating the agenda through 2015?

Cynthia Dautrich (CD): We’re facing a state of highly volatile commodities and currencies in our local markets. Therefore, we have to work day-to-day with our partners to minimise the risk and get a sense of the full business impact. We might see commodity tailwinds at the moment, but there’s definitely an offsetting effect from significant currency headwinds on the horizon.

Therefore, we have to work closely with real time information and model various scenarios with our business partners to mitigate risks to the profit and loss. There are other ways that risk is a big discussion point: We’ve seen what an impact a major supply chain disruption can have. We are looking to strike the right balance between global leverage and local sources of supply. Many times, local suppliers will bring access to innovation in ways we had not thought about before.

PL: Thinking about the theme of the World Procurement Congress – Mapping the Future – what do you see as the next horizon that those at the cutting edge will be looking at in the coming months?

CD: I think the next horizon is for companies that are able to use procurement to drive competitive advantage. These companies are asking how procurement can be integrated into the end-to-end value chain to better serve the customer. In our world of fast-moving consumer goods, that means starting with the consumer and then looking across the value chain to make sure we’re aligned to deliver value to the consumer. I think we’re going to see more blurring of lines as the end-to-end supply chain becomes less of a collection of parts and more a seamless whole.

PL: Can you give an insight into where procurement at Kimberly-Clark is heading in 2015?

CD: We’re looking at several key initiatives for 2015. The main focus is our transformation agenda where our aspiration is to help each business win profitably in their respective markets by delivering world-class value and service. In order to be in a position to do that, we needed to prioritise four areas.

The first is business alignment. We want to develop joint measures of success between procurement and our partners in the business and other functions. That means developing a robust and balanced scorecard and asking for feedback on a quarterly basis from all levels of our stakeholders.

Talent is the second focus area and we’re continuing our quest to build a deep bench of talented individuals in 43 countries. Talent is always a focus for the business and procurement, but specifically we’re targeting 50 critical positions to develop successors and comprehensive development programmes.

The third part is stepping back from where we are and using a global benchmarking exercise to measure our progress toward world-class delivery. Many of our local and regional teams are becoming more mature and we have to look at the way we manage categories on a global, regional and local basis –providing clarity on roles, responsibilities and decision rights.

The fourth focus area is ethics and compliance. Of course, that’s never gone away, but we’re looking to renew our commitment to these areas and reassess how we put ethics and compliance at the heart of every decision. We will launch a new global policy manual across the function to strengthen our compliance capability.

You can stay on top of all the coverage on the 27th-28th May on the live blog and on Twitter, using #WPC.

This article is an extract from a larger interview. Procurement Leaders members can access the full interview here.

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Humor

By MICHAEL IAN BLACK from NYT Books http://ift.tt/1JTg2TV
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Rotating Jobs Can Bring A Business Mindset To Procurement

Without having done some of the work technical people in the company do, it’s hard to understand their challenges and pressures, and hard to convince them that you know what you are talking about when you give advice. Procurement needs a solution...

"If you’ve never built it, how can you buy it?"

That was a rhetorical question posed by one participant at a recent Procurement Leaders Roundtable on ensuring the delivery of procurement value in the future. The speaker was referring to the need for actual experience in certain technical categories in his industry. Without having done some of the work technical people in the company do, he said, it’s hard to understand their challenges and pressures, and hard to convince them that you know what you are talking about when you give advice. It’s an observation that can apply to some extent in non-technical areas as well. And, it brings us to the issue of whether actual category experience will be more important than procurement experience in procurement organizations of the future.

The answer is “no.” But, on the other hand, it isn’t less important than actual procurement experience either. The best procurement teams are and will be composed of people with a blend of experiences, as another Roundtable participant asserted.

You can help staffers develop their procurement skills by the guidance you provide and the training opportunities you make available. Mentoring is an especially good strategy.

For the category experience, one good way to ensure that staff have the specialized knowledge necessary to successfully provide sourcing and other procurement advice to engineering, marketing, legal and other functions, short of recruiting from those functions, is a system of job rotations.

Procurement Leaders’ research report “Upskilling Procurement” says that rotating people in and out of other functions develops a broader business perspective and more technical expertise.

Most leading CPOs have broad experience in other functions, and encourage development of skills in areas outside procurement. Kimberly-Clark is one company where several procurement executives have experience in multiple fields. And that broad exposure to other functions can help procurement executives land other jobs in the company’s executive hierarchy. For example, Rick Jacobs, president of Eaton Corporation’s Hydraulics Division for Europe, the Middle East, and Africa, formerly was Corporate Vice President of Supply Chain, and before that held engineering and technical management positions at other companies.

The broad exposure from job rotation can help procurement managers think more like business people. And that mindset, already important, will be absolutely critical in the future.

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Tuesday: New Home Sales, Case-Shiller House Prices, Durable Goods and More

From Bloomberg: What Would Happen If Greece Doesn’t Pay the IMF: Q&A

Q: What will the IMF do?

A: A missed payment date starts the clock ticking. Two weeks after the initial due date and a cable from Washington urging immediate payment, the fund sends another cable stressing the “seriousness of the failure to meet obligations” and again urges prompt settlement. Two weeks after that, the managing director informs the Executive Board that an obligation is overdue. For Greece, that’s when the serious consequences kick in. These are known as cross-default and cross-acceleration.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 3 and DOW futures are down 20 (fair value).

Tuesday:
• At 8:30 AM ET, Durable Goods Orders for April from the Census Bureau. The consensus is for a 0.6% decrease in durable goods orders.

• At 9:00 AM, the FHFA House Price Index for March 2015. This was originally a GSE only repeat sales, however there is also an expanded index.

• At 9:00 AM, the S&P/Case-Shiller House Price Index for March. Although this is the March report, it is really a 3 month average of January, February and March prices. The consensus is for a 4.6% year-over-year increase in the Comp 20 index for March.

• At 10:00 AM, New Home Sales for April from the Census Bureau. The consensus is for an increase in sales to 509 thousand Seasonally Adjusted Annual Rate (SAAR) in April from 481 thousand in March.

• Also at 10:00 AM, Richmond Fed Survey of Manufacturing Activity for May.

• Also at 10:00 AM, Regional and State Employment and Unemployment (Monthly), April 2015

• At 10:30 AM, Dallas Fed Manufacturing Survey for May.

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Gasoline Prices: Down a Dollar from last year on Memorial Day

According to Gasbuddy.com (see graph at bottom), gasoline prices are down to a national average of $2.75 per gallon. One year ago for the week of Memorial Day, prices were at $3.75 per gallon, and for the same week two years ago prices were $3.70 per gallon.

Ten years ago, price were at $2.17 per gallon, and fifteen years ago at $1.57.

Memorial Day	Weekly Average Gasoline Price
29-May-00	$1.57
28-May-01	$1.74
27-May-02	$1.43
26-May-03	$1.53
31-May-04	$2.10
30-May-05	$2.17
29-May-06	$2.94
28-May-07	$3.25
26-May-08	$3.99
25-May-09	$2.49
31-May-10	$2.84
30-May-11	$3.90
28-May-12	$3.73
27-May-13	$3.70
26-May-14	$3.75
25-May-15	$2.75

According to Bloomberg, WTI oil is at $59.40 per barrel, and Brent is at $65.37 per barrel.  Last year on Memorial Day, Brent was at $110.01 per barrel, and two years ago Brent was at $103.77.

Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

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Schedule for Week of May 24, 2015

The key reports this week are April New Home sales on Tuesday, the 2nd estimate of Q1 GDP on Friday, and March Case-Shiller house prices on Tuesday.

For manufacturing, the May Richmond and Dallas Fed surveys will be released this week.

----- Monday, May 25th -----
All US markets will be closed in observance of Memorial Day.

----- Tuesday, May 26th -----
8:30 AM: Durable Goods Orders for April from the Census Bureau. The consensus is for a 0.6% decrease in durable goods orders.

9:00 AM: FHFA House Price Index for March 2015. This was originally a GSE only repeat sales, however there is also an expanded index.

9:00 AM: S&P/Case-Shiller House Price Index for March. Although this is the March report, it is really a 3 month average of January, February and March prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the February 2015 report (the Composite 20 was started in January 2000).

The consensus is for a 4.6% year-over-year increase in the Comp 20 index for March. The Zillow forecast is for the National Index to increase 4.2% year-over-year in March, and for prices to increase 1.0% month-to-month seasonally adjusted.

10:00 AM: New Home Sales for April from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the March sales rate.

The consensus is for an increase in sales to 509 thousand Seasonally Adjusted Annual Rate (SAAR) in April from 481 thousand in March.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for May.

10:00 AM: Regional and State Employment and Unemployment (Monthly), April 2015

10:30 AM: Dallas Fed Manufacturing Survey for May.

----- Wednesday, May 27th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, May 28th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 270 thousand from 274 thousand.

10:00 AM: Pending Home Sales Index for April. The consensus is for a 0.8% increase in the index.

----- Friday, May 29th -----
8:30 AM: Gross Domestic Product, 1st quarter 2015 (second estimate). The consensus is that real GDP decreased 0.9% annualized in Q1, revised down from the 0.2% advance estimate.

9:45 AM: Chicago Purchasing Managers Index for May. The consensus is for a reading of 53.0, up from 52.3 in April.

10:00 AM: University of Michigan's Consumer sentiment index (final for May). The consensus is for a reading of 90.0, up from the preliminary reading of 88.6, and down from the April reading of 95.9.

from Calculated Risk http://ift.tt/1Ssww97
via YQ Matrix

Yellen: Expect Rate Hike in 2015, Several Years before Fed Funds Rate "back to normal" level

From Fed Chair Janet Yellen: The Outlook for the Economy

[I]f the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term.

After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely to be gradual. The various headwinds that are still restraining the economy, as I said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain. If conditions develop as my colleagues and I expect, then the FOMC's objectives of maximum employment and price stability would best be achieved by proceeding cautiously, which I expect would mean that it will be several years before the federal funds rate would be back to its normal, longer-run level.

Having said that, I should stress that the actual course of policy will be determined by incoming data and what that reveals about the economy. We have no intention of embarking on a preset course of increases in the federal funds rate after the initial increase. Rather, we will adjust monetary policy in response to developments in economic activity and inflation as they occur. If conditions improve more rapidly than expected, it may be appropriate to raise interest rates more quickly; conversely, the pace of normalization may be slower if conditions turn out to be less favorable.
emphasis added

from Calculated Risk http://ift.tt/1Q1z3mP
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Key Measures Show Low Inflation in April

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in April. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.2% annualized rate) in April. The CPI less food and energy rose 0.3% (3.1% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed has the median CPI details for April here.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.2%, the trimmed-mean CPI rose 1.7%, and the CPI less food and energy rose 1.8%. Core PCE is for March and increased 1.35% year-over-year.

On a monthly basis, median CPI was at 2.2% annualized, trimmed-mean CPI was at 2.2% annualized, and core CPI was at 3.1% annualized.

On a year-over-year basis these measures suggest inflation remains below the Fed's target of 2% (median CPI is slightly above 2%).

The key question for the Fed is if these key measures will move back towards 2%.

from Calculated Risk http://ift.tt/1c9vai5
via YQ Matrix

Developing A Successful Category Management Strategy

Some of the leading minds are set to come together at the World Procurement Congress to talk successful category management.

Get your category management strategies right and you can open up a whole host of new opportunities for the function and the business. But there are those out there looking at how they can implement a strategic category management plan and need your help to do so.

In a Procurement Leaders Collaborate group some of the questions that the community have been asking include:

• How do you code/classify suppliers, and what are the definitions which have built those classifications?
• What are the three most important activities a category manager should perform?
• What steps have you implemented as part of your category management process?
• How do you ensure compliance with your category strategy from a process and communication perspective?

To stimulate discussion on the topic Procurement Leaders will be bringing this topic to a live environment on the first day of the World Procurement Congress in London. Some of the questions that will be covered in these discussions will include: 

• How procurement can bridge the gap between global and local agendas when implementing category management?
• How spend under-management can be handled
• What procurement should do to ensure that stakeholders are more engaged?

The session will begin with a brief presentation on best practice in category management Participants will then be divided into a number of small working groups, with each one addressing one of these key questions. Following these discussions group leaders will then provide a summary of the discussions.

To find out more about the advice shared visit the online collaboration group here or to find out more about the World Procurement Congress click here.  

from Procurement Leaders Blog http://ift.tt/1KoXeNA
This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.

With AMR announcement, is NASPO distancing itself and the UPPCC certification program from the NIGP? by Jon Hansen

“It appears NIGP just transferred the crown jewels (certification) to NASPO . . . this would have been absolutely unheard of in the past.  Are they (UPPCC) looking to maintain credibility?

One aspect we did not discuss.  Most professional organizations are based upon individual memberships.  NIGP is based on agency memberships.  It is the city, county, state, etc. that belongs to NIGP; the individuals are representatives.  If NIGP has an ethics issue, it could reflect back upon those agencies.” – Anonymous Source

I barely had the chance to take my first sip of coffee this morning when I received – along with the above note – a copy of yesterday’s announcement that the Universal Public Procurement Certification Council (UPPCC) had selected AMR Management Services (AMR) as its new management partner effective July 1, 2015.

The UPPCC, which was founded in 1978 by the National Association of State Procurement Officials (NASPO) and NIGP: The Institute for Public Procurement, had been establish as an independent entity to “govern and administer the Certified Public Procurement Officer (CPPO) and Certified Professional Public Buyer (CPPB) certification programs.”

AMR Management Services, which provides professional services for more than 20 leading national and international associations – including NASPO – “handle all facets of association management” for their clients.

Based on the above, what does this move really mean?

Is it, as my anonymous source suggests, reflective of a shift that “would have been absolutely unheard of in the past”?

What role did the growing controversy surrounding the #CodeGate scandal play in terms of either facilitating or accelerating this change?

As another source put it,  “I did not see that (the AMR move) coming. Maybe this was what I had heard that NASPO was upset about with NIGP a couple months ago”. In short, and to what extent prior to the Missouri bid protest that led to the #CodeGate scandal becoming public knowledge, was the relationship between NASPO and the NIGP already strained?

At this stage it is hard to determine whether any one factor, or a combination of factors is behind this news. However, one of the first thoughts that came to my mind was simply this . . . by announcing the shift to AMR – who already manages NASPO, will the certification program be associated more with NASPO, as opposed to the NIGP?

After all, the CPPB and CPPO are certifications that are offered through the Universal Public Procurement Certification Council (UPPCC). By placing the management of the UPPCC under AMR, it is a smart way to give the outward appearance that not much as changed, while simultaneously creating some distance between the program and the NIGP.

If you think about it for a moment it is a somewhat brilliant move in that it sends –  under a cover of plausible deniability, a definite message to both the NIGP and public sector professionals. This latter point came to me when I spoke with a third anonymous source who, although already aware of the AMR story, suddenly had to take another call when I offered my distancing theory.

There is of course a downside to the move that likely hasn’t been considered.

When a growing controversy gets out of hand, containment becomes the order of the day. While AMR becoming the UPPCC’s new “management partner” may calm the waters within the procurement community – at least for the time being, it might not be seen as a positive move in the general business world. Especially if another Missouri-type controversy rears its head in the future.

While a good percentage of my readership is made up of procurement professionals, there are many C-Suite executives from the general business community who, as listeners of my radio show, also follow the Procurement Insights blog. This story is no longer just procurement industry news.

Within this context, when the next crisis occurs – and it likely will in some form or another, as long as the NIGP maintains its relationship with Periscope – there will be even more eyes and ears tuned into the story.

At that point the creditability of the industry is likely to take a significant hit. When it does, and as discussed in my radio interview with Marie Meliksetian yesterday, the consequences will be significant. Especially with the recruitment and retention of Generation Next professionals.

IBM Study makes one wonder how Generation Next professionals will react to a scandal like #CodeGate

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This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.