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McNally Capital Announces Investment in Re-Sourcing Holdings

McNally Capital has invested in New York City-based Re-Sourcing Holdings, a provider of strategic staffing, consulting, and direct hire solutions, focusing on compliance, legal, information technology, finance and accounting, and human resource jobs. Re-Sourcing serves clients through six brands: JW Michaels & Co., Compliance Risk Concepts, ExecuSource, Perennial Resources International, Partnership Employment, and Technology Navigators.

McNally Capital and Re-Sourcing Holdings are actively seeking add-on opportunities, specifically targeting lower mid-market temporary staffing firms in primary, secondary, and tertiary cities in the U.S. Among others, Jeff Bowling, founder and former chief executive officer of the Delta Cos., a Dallas-based staffing firm, participated alongside McNally Capital in the due diligence process and as a co-investor in the transaction.

Industrial Output Falls in December

Industrial production declined 0.3% in December, the third drop in the past four months, according to the U.S. Federal Reserve. Wall Street had anticipated the 0.3% decline. For the fourth quarter as a whole, industrial production declined at a 0.5% annual rate. Production retreated in three of the four quarters of 2019. Output was down 1.0% for the year.

Manufacturing output advanced 0.2% in December, but was down at a 1.0% rate for the fourth quarter. The increase in December came despite a 4.6% decline in output of motor vehicles and parts. Mining output rose 1.3% in December, while utility output declined 5.6% as warmer weather cut into the demand for home heating.

Capacity utilization dropped to 77% in December, the second lowest reading in 27 months. Capacity utilization remains below prerecession levels—above 80%—that economists say could fuel production costs and prices.

Jobless Claims Fall Fifth Straight Week

The number of people applying for unemployment benefits in early January declined for the fifth consecutive week, signalling the labor market is sturdy. Jobless claims dropped by 10,000 to 204,000 in the week ended Jan. 11, according to the U.S. Department of Labor. Economists surveyed by MarketWatch had forecast a reading of 220,000. The monthly average of new claims declined to 216,250 from 224,000.

Claims declined to a 50-year low of 193,000 last April and have mostly hovered in the low 200,000s since then. Some companies have cut employment in the past few months, primarily in manufacturing, energy, and transportation. However, layoff figures remain very low.

Philly Fed: Manufacturing Rose in January

The Federal Reserve Bank of Philadelphia says manufacturing activity in the region increased this month, according to firms responding to the January Manufacturing Business Outlook Survey. The survey’s indicators for current activity, new orders, shipments, and employment were all positive and increased from their readings in December. The survey’s future activity indexes remained at relatively high readings, suggesting continued optimism about growth for the next six months.

Nearly 28% of the firms reported higher employment, while 9% reported lower
employment. The average workweek index remained positive but edged down three points.

Beige Book: Modest Economic Growth Amidst Tight Labor Market

Economic activity generally continued to expand modestly in the final six weeks of 2019, according to the U.S. Federal Reserve’s “beige book.” Manufacturing activity remained essentially flat in most districts. Business in nonfinancial services was mixed but, on balance, growing modestly.

Employment was steady to rising modestly in most districts, while labor markets remained tight. Most districts cited widespread labor shortages as a factor constraining job growth. A few districts noted brisk demand for professional, technical, and managerial workers. A number of Districts reported job cuts or reduced hiring among manufacturers, and there were scattered reports of job cuts in the transportation and energy sectors. Wage growth was characterized as modest or moderate in most districts—similar to the prior reporting period—and there were scattered reports of wage increases from year-end hikes in minimum wages. A few districts also noted the use of benefits, incentives, training programs, and automation to reduce vacancies.

Volt Information Sciences Inc.: Fourth Quarter and Fiscal 2019 Results

Volt Information Sciences Inc. reported net revenue of $258.4 million for the fourth quarter of fiscal year 2019, down 2.4% from $264.8 million in the fourth quarter of fiscal year 2018. The company reported a net loss of $749,000, compared with a net loss of $2.9 million in the year-ago quarter. Over the same period, North American staffing revenue totaled $216.6 million, down from $220.5 million, and international staffing revenue totaled $30.6 million, up from $27.3 million.

For all of fiscal year 2019, net revenue totaled $997.1 million, down 4.0% from $1.0 billion in fiscal year 2018. The company reported a net loss of $15.2 million, compared with a net loss of $32.7 million for fiscal year 2018. Over the same period, North American staffing revenue totaled $830.9 million, down from $860.5 million, and international staffing revenue totaled $114.4 million, from $117.4 million.

Linda Perneau, president and chief executive officer, said, “We exited or de-emphasized less profitable businesses, while placing a greater focus on growing business with attractive margin profiles. We did this while implementing significant cost savings, organizational changes, process changes, and updates to our systems. The positive results of these changes are just beginning to manifest in the form of improved financials.”

Online Labor Demand Rose in December

The Conference Board Help Wanted OnLine Index rose in December and now stands at 102.4, up from 101.7 in November. The index declined 0.3% from the prior month and is down 2.0% from a year ago. The professional occupational category experienced increases in community and social services (2.0%), health care practitioners (1.8%), architecture and engineering (1.0%), and computer and mathematical science (0.7%). The services and production occupational category experienced increases in farming, fishing, and forestry (3.9%), building and grounds (3.6%), health care support (2.5%), and personal care and service (1.4%).

Kelly Services Acquires Insight

Kelly Services has acquired Insight, a Cherry Hill, NJ-based education service staffing firm that has partnered with school districts in Illinois, Massachusetts, New Jersey, and Pennsylvania. Terms of the acquisition were not disclosed. Insight will merge with Kelly Education.

PPI Shows Tepid Increase in U.S. Wholesale Inflation at the End of 2019

The wholesale cost of goods and services barely advanced in December, suggesting there was little inflationary pressure building up at the end of 2019. The producer price index edged up 0.1% last month. Economists surveyed by MarketWatch had forecast a 0.2% rise. Wholesale inflation increased just 1.3% in 2019—half as much as it did in 2018.

The cost of goods rose 0.3% in December, with most of the increase linked to higher prices for gasoline. Energy prices increased 3.3% in 2019 but are still fairly low overall. Core PPI, which strips put food and energy, ticked up 0.1% last month. The 12-month core rate rose to 1.5% from 1.3%, but it’s much lower now that it was a year ago.

New York Fed: Manufacturing Activity Little Changed

Business activity grew to a small degree in New York State, according to firms responding to the January 2020 Empire State Manufacturing Survey. The headline general business conditions index was little changed at 4.8. New orders and shipments edged higher. Delivery times were somewhat shorter, and inventories held steady. Employment continued to expand, though the average workweek was unchanged. Both input prices and selling prices increased at a significantly faster pace than in December. Optimism about the six-month outlook remained subdued, and capital spending plans remained firm.