Daily business briefing
June 15, 2021Updated
June 15, 2021, 9:58 a.m. ET
June 15, 2021, 9:58 a.m. ETRecognition…Alyssa Schukar for the New York Times
Retail sales fell slightly over the past month, the Commerce Department reported Tuesday, as consumers spend less on goods and more on activities like travel, an industry that had been hampered by the pandemic.
The 1.3 percent decline in May follows months of ups and downs in consumer spending, fueled by the persistence of the coronavirus that kept many people away from airports and restaurants. The April data has been revised and shows an increase of 0.9 percent.
But with a growing segment of the country's population vaccinated and infection rates falling, Americans are venturing out on the streets, spending more on housing and entertainment than on the home improvement projects and food hoarding that marked the earlier months of the pandemic.
"Consumer spending growth is shifting from goods to services as the economy reopens," said Gus Faucher, chief economist, PNC Financial Services Group.
Mr Faucher had forecast retail sales last month to grow less than 1 percent, with a large increase in restaurant spend offset by a decline in auto sales due to a lack of inventory. Vehicle production has been slowed by a semiconductor shortage that is part of a global supply chain problem affecting a number of Starbucks products including coffee flavors, furniture and lumber.
Retail sales were a closely watched barometer of the economic recovery during the pandemic. While researchers developed vaccines and states tried to get the virus under control, the federal government spent more than $ 1 trillion during the pandemic to ensure Americans continue to spend money and prevent shops and restaurants from closing.
The stimulus payments have paid off through many measures. Retail sales, which saw a record decline at the start of the pandemic, have returned to pre-pandemic levels, albeit intermittently. Economists are now observing whether the end of economic stimulus money – the last checks were sent in mid-March – will put the recovery to the test.
Michelle Meyer, US economist at Bank of America, said last month's retail sales "underestimated the strength of consumers, if any." She tracked credit card spending over the Memorial Day holiday, the last weekend in May.
Consumers spent 24 percent more on restaurants and 16 percent more on accommodations than they did on Memorial Day in 2019, according to a Bank of America analysis.
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Twenty-five states will suspend some or all of the emergency unemployment benefits, with many Republican governors blaming the programs for labor shortages in many industries when businesses reopen.
The changes affect four programs:
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Federal Pandemic Unemployment Compensation, which provides eligible individuals with $ 300 per week in addition to their regular benefits.
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Pandemic Emergency Unemployment Compensation that extends benefits to workers who have exhausted their state allocation.
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Pandemic unemployment benefit, which covers freelancers, part-time workers, seasonal workers and others who are normally not eligible for government unemployment benefits.
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Mixed earning unemployment benefit that provides additional support for people who earn their income by combining employment with freelance work.
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Recognition…Guerin Blask for the New York Times
At a time when business leaders are increasingly expected to act as moral arbiters, professional services giant PwC has recognized an opportunity: teaching executives to be more trustworthy.
On Tuesday, it unveiled a plan to align the company, which offers a range of accounting and advisory services, with the concept of trust. (It also announced a goal of $ 12 billion in recruiting, training, and technology, with plans to hire 100,000 new employees.)
It's an offering that directly targets the need of American companies to consider more than just profits and shareholders.
Managers are now regularly under pressure to speak up on issues such as racial justice and the environment. And companies are in an unusual position to be society's most trusted institutions, more so than governments, nonprofits, and the media, according to the latest edition of a long-standing survey by public relations firm Edelman.
These increased expectations have opened up a new opportunity for PwC, said Tim Ryan, US president and senior partner of the company. “The skills you need as a C-suite manager today are fundamentally different than they were five years ago,” he said in an interview. "Just as technology has defined the last 10 years, trust will determine the next 10 years."
As part of the overhaul of PwC, the company will combine its accounting and tax services into a new division called Trust Solutions.
The US arm of PwC will also spend $ 300 million on new trust-related initiatives. The most important one is the PwC Trust Leadership Institute, which teaches clients how to deal with topics such as transparency, ethics, data security, corporate governance as well as politics and politics – without prescribing specific solutions.
Dealing with breach of trust is something the Big Four accounting firms, including PwC, have experience with as they face legal battles on issues such as international tax evasion and the improper mix of auditing and advisory services.
To reinforce PwC's commitment to investing in a more diverse workforce, and improving economic mobility – both issues the leadership institute considers essential to building trust – the company has allocated $ 125 million to help support 25,000 black and white To provide career coaching and mentoring to Latin American college students. PwC plans to hire 10,000 of them over the next five years.
The foundation for the initiative was laid two years ago, Ryan said when PwC embarked on a strategic review and consulted with clients on new directions for the company. By this point, Mr. Ryan had already reflected on diversity and inclusion and reported on PwC's progress on these issues.
Then the pandemic and social justice protests following the assassination of George Floyd inspired the company's leadership to pursue its new identity.
Mr Ryan said corporate executives often learned soft skills on the job and need help rethinking decisions in a way that maximizes confidence. It is understandable that many managers fall short, he added – but it is up to them to make up for the lost time.
"I don't see it in any way as an indictment of the current leadership," said Ryan. "The world is changing."
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Recognition…Andy Rain / EPA, via Shutterstock
Britain and Australia have "in principle" agreed on a free trade agreement, the British government announced on Tuesday, an agreement that should eventually abolish tariffs between the two countries.
It is the UK's first major trade deal since leaving the European Union, and the deal was reached in just under a year of negotiations.
Details of the deal have not yet been released, but the government said it would include a 15-year cap on duty-free imports, a measure designed to appease British farmers concerned about a spate of beef and sheep imports from Australia. The deal will remove Australia's 5 percent tariff on exports of Scottish whiskey. The deal will also make it easier for Britons under 35 to travel and work in Australia, the government said.
"It is a fundamentally liberalizing agreement," said Liz Truss, foreign minister for international trade, in a statement. "This removes tariffs on all UK goods, opens up new opportunities for our service providers and technology companies, and makes it easier for our employees to travel and collaborate."
The deal was finalized on Monday over dinner on Downing Street, the UK Prime Minister's residence, when Australia's Prime Minister Scott Morrison is in the UK after the Group of 7 meetings.
The free trade agreement has been fully negotiated since the UK officially left the European Union in January 2020. The UK has signed numerous other trade deals recently, but these, like the one with Japan, have largely replicated pre-Brexit market access.
The Australia Agreement is part of Britain's broader trade ambitions, including joining the Trans-Pacific Partnership Comprehensive and Progressive Agreement, the trade pact signed by 11 countries after President Donald J. Trump withdrew the United States from the Trans-Pacific Partnership. Australia is a founding member of this agreement and the UK's accession process began in early June.
Since Brexit, Britain has sought to prove that it is an outward-looking nation and that it is actively embodying its 'Global Britain' slogan. But the urgency with which it seeks new trade deals has been recently attacked by food and agribusiness concerns that the government will allow products with lower production standards.
Scott Walker, chairman of the board of directors of National Farmers Union Scotland, said the industry had been told the agreement would put safeguards in place, but "there weren't many details about what they would mean in practice".
One of the main concerns for farmers in Scotland is that Australians are using a ranching system that allows for larger production with more cattle in a smaller space than the UK allows, Walker said. This could undercut Scottish cattle farmers. He said that the Australian trade deal alone was not the biggest problem, but fear that trade negotiators in New Zealand and the United States would next want to replicate that deal.
"We see this only as the beginning of what could be a major problem for the UK industry," said Walker.
In Australia, the deal was welcomed by the meat and wine industries, two of the industries expected to benefit most from the deal.
"It is exactly the tonic that the Australian wine sector has needed to reposition itself quickly after the market in China was closed by imposing prohibitive tariffs," said Tony Battaglene, managing director of Australian Grape and Wine, the national association of Country for wine producers said.
Patrick Hutchinson, Chairman of the Board of Directors of the Australian Meat Industry Council, said, "This is a great opportunity for the Australian red meat industry."
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Recognition…about Chanel
Chanel, the French fashion house known for its # 5 perfumes and quilted leather handbags, spent record sums on its stores, supply chain, advertising and sales in one of the most tumultuous times in 2020 despite the stresses of pandemic lockdowns and sales volatility its fashion shows preserve years of retail history.
The company announced Tuesday that sales for 2020 were $ 10.1 billion, 18 percent less than last year. Operating profit declined 41.4 percent to just over $ 2 billion over the same period. But unlike some competitors in the industry who were forced to cut costs last year, Chanel gave $ 1.36 billion on "brand support activities" like advertising and catwalk shows, and $ 1.12 billion on investments like that Acquisition and renovation of its network of boutiques and new offices from and the ecosystem of small craft businesses that manufacture its luxury goods.
"A privately owned luxury company is that we could prioritize protecting our employees and vulnerable supply chain partners, even if we knew it would adversely affect short-term profitability and cash flow," said Chanel's CFO, Philippe Blondiaux. “It was the most difficult year ever for this company. But for us the most important thing was to defend our values and our way of doing business. "
At a time when the global fashion industry is being scrutinized more than ever for its environmental practices, Chanel said it had raised € 600 million, or $ 727 million, in sustainability-linked bonds, which are becoming increasingly popular for businesses to use To raise money for environmental or social projects without spending restrictions, but with penalties to investors if they fail to achieve certain goals.
Mr Blondiaux said the September issue was the first of its kind by a luxury brand, underscoring the brand's commitment to its climate goals. A week ago, Chanel pledged $ 25 million for a new climate adaptation fund that aims to invest in sustainable farming practices, protect forests and support smallholders in developing countries.
At a time of heightened competition in high-end retail and lingering rumors that Chanel could be a takeover target, the traditional French fashion house – one of the last major private brands – began releasing results in 2018 to fend off attempts.
"Despite the difficulties of 2020, we are in a great position to continue growing the Chanel business and maintaining the brand's long-term appreciation," said Mr Blondiaux.
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Recognition…Scott Kowalchyk / CBS
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There were 213 unattended episodes of "The Late Show With Stephen Colbert," broadcasts delivered off-screen by executive producer Chris Licht and wife Evie instead of laughter from a crowded hall. The normally buttoned host took off his suit and let his hair grow. Mr Colbert was in his element again on Monday, reconnecting with a ton of capacity 460 days after the coronavirus pandemic cleared the theater he has worked in since 2015. The return to the stage of the late night's top-rated host was one of the clearest signs that things were getting back to normal on television and New York cultural life.
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Washington Prime Group, which oversees 102 malls in the U.S., said Sunday it filed for Chapter 11 bankruptcy after its business was hit during the pandemic. The company said that last year pedestrian traffic in its properties was "forced to provide rent relief to certain tenants through a combination of rent deferrals and cuts" in an attempt to stave off bankruptcies and rent abandonment last year. The company said in a statement it expects business to continue as normal throughout the restructuring.
Recognition…Elliott Verdier for the New York Times
Ikea France was fined € 1 million ($ 1.2 million) by a French court on Tuesday after being found guilty of illegal surveillance of union organizers, employees, job applicants and even disgruntled customers for nearly a decade what ended a longstanding case that had attracted national attention.
The Versailles court, where a trial was held in April, sentenced former CEO of Ikea France, Jean-Louis Baillot, to two years probation and a fine of 50,000 euros. Side judgment.
A lawyer for Mr. Baillot said he denied the wrongdoing and was considering an appeal. Ikea France's lawyer Emmanuel Daoud said the company is looking into the court's decision. The company's fine was less than the € 2 million fine requested by prosecutors.
During the trial, Mr Baillot and Mr Daoud denied having ordered surveillance and presented the operations as the work of a single man, Jean-François Paris, then head of risk management for the French unit. Mr Paris testified that Ikea France executives knew about the activity and supported it.
The court sentenced Mr Paris to a suspended sentence of 18 months and a fine of 10,000 euros.
Prosecutors said Ikea France did widespread snooping to investigate employees, screen workers in the event of illness, and assess customers seeking refunds for botched orders. A former military agent has been hired to carry out some of the more secretive operations.
The French unit also conducted illegal background checks on at least 400 job applicants and used the information to weed out some candidates without their knowledge. It's also targeted Prosecutors indicted union members who tried to strike and recruit members, monitor them and even plant a mole in an Ikea store where union activity was high.
The case sparked outrage in 2012 after emails with details of the activity leaked to the French media. There is no evidence that similar surveillance has taken place in the other 52 countries where Ikea operates.
Mr Daoud, a lawyer for Ikea France, stated that the court had not found "system-wide surveillance".
Adel Amara, a union leader at an Ikea store targeted by surveillance, said Tuesday that while he was disappointed that no tougher sentences were imposed, justice had been done.
"This process marks the beginning of a new era, an ongoing movement," he said. "Where bosses can be condemned, where they are no longer kings and where citizens are defended."
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