ECONOMIC OUTL
A20 dailybusinessreview.com
capital spending recovery may be slow
B
usiness investment in equipment
and facilities may be headed
higher, but many companies in
South Floirda are likely to keep conserv-
ing cash because the direction of the
economy is unclear.
An informal survey of 20 nonfinancial
public companies based in Miami-Dade,
Broward and Palm Beach counties re-
veals that 15 of them put more cash into
capital spending during the first half of
the year than in the same period last
year.
Capital spending at Boca Raton-based
Office Depot, for example, rose to $83.2
million in the January-June period from
$53.7 million in the first half of 2009, a
55 percent increase.
Among the other South Florida
companies that increased their capi-
Manpower finds slight
improvement in hiring
A
quarterly survey by tem-
porary staffing agency
Manpower shows minor
improvement in the fourth-quar-
ter hiring outlook among South
Florida employers.
“There is a slight increase” in
the fourth-quarter staffing plans
of South Florida employers, said
Cecilia Alvarez, the Miami branch
manager of Manpower. “It’s not
significant.”
Manpower found that 17 per-
cent of employers in Miami-Dade,
Broward and Palm Beach coun-
ties plan to hire more workers in
the final three months of the year
while 15 percent said they plan
to eliminate jobs in the October-
December period.
Preview
SALES, INVENTORIES: The Census
Bureau will report the August volume of
retail sales and the July level of business
inventories on Tuesday.
FACTORY OUTPUT: The Federal
Reserve will release its September esti-
mate of industrial production and capac-
ity utilization on Wednesday.
PRODUCTION COSTS: The Bureau of
‘‘
Florida now leads the
nation in bank failures – the
banks based here are very, very
conservative in their [loan]
underwriting.”
ken thomas
bank consultant
tal spending in the first half were Fort
Lauderdale-based vehicle retailer
AutoNation, Wellington-based aircraft
furnishings manufacturer B/E Aerospace
and specialty construction contractor
MasTec in Miami.
About two-thirds of area em-
ployers said they will keep their
staff sizes unchanged during
the fourth quarter. Many South
Florida businesses are in a pay-
roll holding pattern because “their
budget is not expanding, as of yet,
and they’re not adding to head
count,” Alvarez said.
Nevertheless, this year’s stale-
mate is progress compared to
last year’s stagnation. A year ago,
the Manpower survey of South
Florida employers found a more
pessimistic hiring outlook for the
fourth-quarter of 2009, with 8
percent planning to add employ-
ees and 15 percent planning to
eliminate jobs.hey are staying a
night or two.”
Labor Statistics will release its August in-
dex of producer prices on Thursday.
INFLATION, SENTIMENT: On Sept. 17,
the Bureau of Labor Statistics will release
its August index of consumer prices,
and the University of Michigan and the
Thomson Reuters information service
will report their September index of con-
sumer sentiment.
K by MIKE sEEMUTH
FRIDAY, SEPTEMBER 10, 2010
Companies that cut capital spending are unavailable.
in the first half from last year’s level in- A recovery in capital spending is likely
cluded Fort Lauderdale-based software to be slow because “busi-
vendor Citrix Systems, Miami-based con- ness confidence is quite
sulting firm Hackett Group and Mednax, low right now. There’s
a provider of pediatric physician care not a whole lot of positive
headquartered in Sunrise. outlook,” said Ken Thomas,
Liquidity is still a priority. Among the a Miami-based economist
20 companies surveyed, 12 had more and bank consultant.
cash at the end of June than a year ear- “Instead of talking about
lier, and one reported virtually no change Thomas recovery, we’re talking
over the year. about what? Double-dip recession.”
Nationwide, capital spending flattened A spate of community bank failures
after the U.S. recession started about has done little to expand credit availabil-
three years ago. ity for capital spending.
After four consecutive annual increas- “Florida now leads the nation in bank
es, capital spending by non-farm U.S. failures,” Thomas said, and because of
businesses was virtually unchanged from increased regulatory scrutiny, “the banks
2007 to 2008. based here are very, very conservative in
Comparable data for 2009 and 2010 their [loan] underwriting.”
Student loan defaults could
spread if economy stays weak
S
tudent loan defaults may become more
common if good jobs for graduates of by the numbers
universities, colleges and trade schools
remain scarce. 8.7 %
Credit bureau TransUnion reported that
out of the entire country last year, the state Student loan default rate at Broward College
that had the highest delinquency rate for in the 2007 fiscal year.
private loans to students — with 9.44 per-
cent of these loans 90 days or more past 7%
due — was Florida.
Chicago-based TransUnion estimates
that about 20 percent of the student loans
Student loan default rate at Broward College
in 2006.
in the United States are underwritten by
private lenders, and about 80 percent are
backed by the federal government.
6.7%
Student loan default rate at Broward College
Borrower default rates in 2005.
may be higher for govern-
ment-backed student loans
than for private ones. since 2009.
According to the U.S. The South Florida unemployment rate
Department of Education, was 12.1 percent in July, compared with
even before the national the annual average rates of 10.2 percent in
economic recession began 2009 and 6.1 percent in 2008.
in 2007, at least 10 South Labor force expansion is propping up
Vitner South Florida’s unemployment rate.
Florida universities, colleges
and trade schools reported a growing num- Wells Fargo senior economist Mark
ber of students who were defaulting on U.S. Vitner believes that one reason for the
government-backed loans. recent growth in the number of South
For example, at Broward College, the Floridians looking for work is due to an
percentage of students who obtained gov- increase in the number of people who are
ernment-backed loans during the federal re-entering the labor force after exiting to
government’s 2007 fiscal year, and who de- learn new skills.
faulted before the end of the following year Further deterioration of student loan
totaled 8.7 percent. quality could lead to
This compared with regulatory sanctions
7 percent in fiscal for certain post-sec-
2006 and 6.7 per- ondary schools.
cent in fiscal 2005. Universities, col-
leges and trade
The reason?
Rising unemploy- schools that enroll
ment rates may be too many delin-
exacerbating this quent borrowers
class of credit dete- could be barred
rioration by limiting from participation in
job opportunities the Federal Family
for those South Education Loan and
Floridians who may the William D. Ford
have earned aca- JOHN MICHAEL RINDO Federal Direct Loan
demic degrees and Florida students are defaulting at a higher rate on programs, among
training certificates their government loans than the rest of the nation. others.