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News that impacts your business. Collected by biztips staff with you in mind.

The business road ahead

Tariffs and lack of workers are starting to bite

ECONOMIC ACTIVITY in the non-manufacturing sector grew in September for the 104th consecutive month, but import tariffs and labor shortages might delay future growth.

That's the picture that emerges from the nation's purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The index stands at 61.6 percent, 3.1 percentage points higher than the August reading of 58.5 percent, and highest since the index was launched in 2008.  Overall, respondents remain positive about business conditions and the current and future economy. But concerns about capacity, logistics and uncertainty with global trade hang over several industries.

Here are comments made in various sectors that illustrate the concerns:

  • Accommodation & Food Services: "[Additional] logistics costs, both inbound and distribution, caused by increased governmental regulation, and a shortage of class-A drivers is leading to a significant increase in [the] cost of goods [sold]."
  • Construction: "New residential construction market is still strong, with a good backlog of orders. Labor shortages and tariffs on materials continue to negatively weigh on earnings."
  • Health Care & Social Assistance: "Business activity has been slightly higher than normal, though pharmaceutical costs continue to put pressure on profitability."
  • Mining: "Prices and supply have flattened, and tariff concerns have subsided for our business [at least for the duration of 2018]. Things seems to be stabilizing."
  • Professional, Scientific & Technical Services: "Overall positive outlook in the economy continues, but we are cautious due to limitations in available manpower."
  • Retail Trade: "Our general state of business is strong, but there is a lot of uncertainty [about] the pending tariffs. This may cause a shift [in] production sites."
  • Wholesale Trade: "Import tariffs on steel, plywood, and [other] lumber are inflating prices, which are difficult to pass along to the end user due to competitive pressures. Labor and trucking shortages are affecting the industry. Low finished goods inventory is inflating home prices and causing buyers to delay purchases."

Slowdown in housing is here

HOUSING CONSTRUCTION has stalled in the U.S. That's the finding of the latest LegalShield Housing Index, one of a suite of leading indicators of the economic and financial status of U.S. households and small businesses. Blame shortages in labor supply, rising labor costs and the impact of tariffs on lumber, steel and aluminum, which are putting upward pressure on prices.

At the same time, The LegalShield Real Estate Index suggests existing home sales will slow in the short term due to severe inventory shortages, rising prices and interest rate increases.

"Although the housing market varies from region to region, overall we're not seeing a big rebound occurring any time soon," says Dave Coffey, LegalShield's Senior Vice President and Chief Digital Officer.

"The Federal Reserve is on track to raise rates for the fourth time this year in December, which will put even more upward pressure on mortgage rates and make home buying even less affordable. Normally we'd expect to see home builders respond by ramping up construction, but it just hasn't materialized."

  • The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased slightly in September, falling 0.3 points to 87.7, reversing August's increase. The dip can be attributed to decreases in three of the six components, including the mortgage rate and household income components.

Bad working conditions lead to unhappy workers, survey finds

ARE YOU causing stress and losing productivity among your workers because of inadequate working conditions?

Almost all American workers polled recently say an inadequate workplace can cause their mental well-being and productivity to suffer.

The study, conducted for National Business Furniture, found that 92 percent of American workers over 18 said that dissatisfaction with their physical workplace affected their mood, stress levels, performance and happiness.

The main complaints were:

  • Cluttered work area
    Nearly two-thirds of respondents (62 percent) say having a cluttered work area would make them unhappy; this is especially true among employed women (70 percent) compared with men (55 percent).
  • Outdated technology
    Having to use outdated technology is a close second (61 percent) in driving workplace discontent; in fact, more than one in four respondents (32 percent) say having multiple computer monitors is critical to workplace happiness.
  • Poor workspace ergonomics
    More than half of respondents (54 percent) say an uncomfortable workspace or chair would cause them displeasure.
  • Lack of privacy and flexibility
    Forty-three percent of employed Americans say not having a private space would affect their mental wellness; one in four (25 percent) value flexible areas to work away from their usual workspaces.

"Many of us who work full-time spend the majority of our day at our desk or work station, so it's not surprising that layout and design has a major effect on our mood," said Dean Stier, chief marketing officer for NBF.

Other findings:

Women are more likely than men (60 vs. 49 percent) to say an uncomfortable working environment would cause them to be unhappy.

Millennials are more likely to admit their physical workspace has an impact on their anxiety levels (47 vs. 38 percent).



Companies are failing to assess risks of new technology

WHILE COMPANIES are increasing their focus on emerging technologies to help transform their businesses, many are not assessing the risks that come with their adoption, according to KPMG LLP's Tech Risk Management Survey.

Nearly half of the 200 senior IT risk management executives surveyed whose companies have adopted mobile applications and devices have not included them in recent IT risk assessments.

"Change and disruption has never moved faster and the speed of technology deployment is critical, but it can't be at the enterprise's expense," said Phil Lageschulte, Leader of Global IT Advisory Services for KPMG.  "Tech risk management should anticipate changes while or before they happen and determine the associated risks. Accordingly, tech risk management should be involved in strategic business planning, embedding the risks and adding value upfront."

For more information: KPMG Tech Risk Management Survey Report: Disruption is the New Norm.


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