US con­sumer con­fi­dence ebbs in Oc­to­ber

Enterprise - - International news -

US con­sumer con­fi­dence de­clined in Oc­to­ber fol­low­ing suc­ces­sive gains in the prior two months, ac­cord­ing to Con­fer­ence Board fig­ures.

The Board´s con­sumer con­fi­dence in­dex fell to 98.6, down from Septem­ber´s down­ward-re­vised re­sult of 103.5. An­a­lysts had forecast the in­dex to drop to 100.8.

“Con­sumers´ as­sess­ment of cur­rent busi­ness and em­ploy­ment con­di­tions soft­ened, while op­ti­mism re­gard­ing the short-term out­look re­treated some­what,” Lynn Franco, the board´s head of eco­nomic in­di­ca­tors, said in a state­ment.

“How­ever, con­sumers´ ex­pec­ta­tions re­gard­ing their in­come prospects in the com­ing months were rel­a­tively un­changed. Over­all, sen­ti­ment is that the econ­omy will con­tinue to ex­pand in the near-term but at a mod­er­ate pace.”

Those say­ing busi­ness con­di­tions were “good” fell slightly from 27.7 per­cent to 26.2 per­cent but those say­ing cir­cum­stances were “bad” rose from 15.8 per­cent to 17.7 per­cent.

Views on the labour mar­ket also dimmed, with the share of those be­liev­ing jobs were “plen­ti­ful” fall­ing to 24.3 per­cent from 27.6 per­cent. The per­cent­age of con­sumers who said they be­lieved busi­ness con­di­tions would im­prove over the next six months was 1 point lower at 16 per­cent, ac­cord­ing to the sur­vey.

Tata shake-up may dis­tract group from re­struc­tur­ing ef­forts

The sur­prise re­moval of Tata Sons´ chair­man Cyrus Mistry and his ad­vi­sory team, and the tem­po­rary re­turn of Ratan Tata, could dis­tract the salt-to-soft­ware con­glom­er­ate from on­go­ing ef­forts to trim debt and re­shape some of its busi­nesses.

The board­room coup sent shares in some Tata listed com­pa­nies lower, though the re­in­state­ment of the widely re­spected Ratan Tata as in­terim chair­man likely helped ease in­vestor con­cerns.

“When Mistry was there some ac­tions were be­ing taken at a group level which would have helped re­duce the com­pany´s cash drain ac­tiv­i­ties,” said Dal­jeet Singh Kohli, re­search head at bro­ker In­dia-Nivesh.

“There was hope that ra­tio­nal, rather than more emo­tional de­ci­sions would pre­vail.” Some an­a­lysts ex­pect un­cer­tainty at Tata may stall some on­go­ing ini­tia­tives, such as the search for a part­ner for Tata Steel´s strug­gling UK as­sets.

“Un­der Mistry, Tata Group have taken sig­nif­i­cant steps to­wards delever­ag­ing and bet­ter uti­liza­tion of cap­i­tal,” Cit­i­group said in a client note, adding his ab­sence may im­pact the group´s fu­ture strat­egy and de­lay the “process of delever­ag­ing.”

“Me­dia re­ports fol­low­ing Mistry´s ouster sug­gested the in­flu­en­tial Tata fam­ily, which owns a ma­jor­ity stake in Tata Sons through a se­ries of trusts, was un­happy with some of his de­ci­sions as chair­man.

Ratan Tata on Tues­day urged those in charge of Tata Group com­pa­nies to fo­cus on their busi­nesses and share­holder re­turns, and not be dis­tracted by the board changes. Those group com­pa­nies own a range of well­known brands, in­clud­ing Jaguar Land Rover, Tet­ley tea, Ti­tan and the Taj Group of ho­tels.

“The com­pa­nies must fo­cus on their mar­ket po­si­tion vis-à-vis com­pe­ti­tion, and not com­pare them­selves to their own past,” Tata said, ac­cord­ing to a com­pany state­ment. Re­fer­ring to on­go­ing ini­tia­tives, he said Tata would “eval­u­ate and con­tinue to un­der­take those that are re­quired”.

Any changes would be dis­cussed with busi­ness heads. “At a busi­ness level, life doesn´t change for us due to this man­age­ment re-jig,” said a se­nior banker and fre­quent in­vestor in Tata group´s bonds.

“What we need to see is what kind of strat­egy they will adopt now to re­vive their weak com­pa­nies.” Mistry´s dis­missal as chair­man - he re­mains a board mem­ber - stunned even Tata in­sid­ers and se­nior ex­ec­u­tives, peo­ple in the com­pany said.

“It came as a sur­prise to us; no­body seemed to know any­thing about it,” said one se­nior Tata Group of­fi­cial, adding they were in­formed through a memo and told the move was “un­likely to have much im­pact on in­di­vid­ual com­pa­nies.

“Tata has dis­banded the group ex­ec­u­tive coun­cil - a core ad­vi­sory team - set up by Mistry, who was try­ing to shake up the $100 bil­lion com­pany through changes to its man­age­ment struc­ture and the in­tro­duc­tion of new faces at se­nior lev­els.

In a sign of the near-150-year-old con­glom­er­ate´s heft, Prime Min­is­ter Naren­dra Modi was told about the lead­er­ship change in a per­sonal let­ter, ac­cord­ing to gov­ern­ment sources. Shares in Tata Steel fell 2.5 per­cent, Tata Power 1.5 per­cent, TCS 1.2 per­cent and Tata Mo­tors 1.1 per­cent.

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