Wholesale prices fell 0.5% in October for biggest monthly drop since April 2020

 Wholesale prices in October posted their biggest decline in 2½ years, providing another indication that the worst of the inflation surge may have passed.

The producer price index, which measures final-demand costs for businesses, declined 0.5% for the month, against expectations for a 0.1% increase from the Dow Jones consensus, the Labor Department reported Wednesday. The department said that was the biggest monthly decline since April 2020.

Excluding food and energy, core PPI was unchanged, also below the forecast for a 0.3% increase. Excluding food, energy, and trade services, the index increased 0.1%.

The report comes a day after the Labor Department said that the consumer price index, which measures prices for goods and services at the consumer level, was unchanged in October from the previous month. That set off an aggressive rally on Wall Street, where sentiment is rising that the Federal Reserve is done raising interest rates and could in fact start cutting in the first half of 2024.

However, consumers in October showed some sensitivity to prices.

The Commerce Department’s advance retail sales report for the month showed a decline of 0.1%, according to a number that is adjusted for seasonal factors but not inflation. Wall Street had been looking for a decline of 0.2%. Excluding autos, sales rose 0.1%, compared to expectations for an unchanged number.

The Great Resignation may be over for most workers — but for some top honchos, it’s only just begun.

The number of chief executive resignations this year hit a record high, according to a recent report by Challenger, Gray, and Christmas Inc.

Over 1,400 CEOs have stepped down from their positions between January to September, marking an almost 50% rise from the 969 departures over the same period last year. The career consultancy firm noted that the figure is the highest since it started compiling data in 2002.

“This increase in CEO turnover isn’t particularly surprising,” said Alexander Kirss, senior principal at the human resources arm of consultancy firm Gartner, explaining that leaders tend to remain at the helm to help steer companies in times of uncertainties.

“Oftentimes, we see CEOs stay in their seats during periods of turmoil. And we had just that during the Covid pandemic, Russian invasion of Ukraine, and other recent events” he told CNBC via telephone, adding that the board of directors for companies usually prefer working with someone they already know during a period of crisis. As such, they are more likely to keep the CEO in place.

But as the world slowly moved toward a new norm of living with Covid and away from crisis mode, CEO turnovers also rose. 

CEOs are looking around and thinking: ‘I prefer a position in another company,’ or ’I prefer retirement. I don’t want to be a CEO anymore.
Alexander Kirss

The Great Resignation, which started in 2021, was marked by a mass exodus of workers in the wake of the pandemic when employees began to rethink their priorities and consider work-life balance. Some employees chose to leave their jobs largely due to low pay and the lack of career advancements.

The wave of resignations subsequently extended into 2022, where more than 50 million workers tendered their resignations, breaking the 47.8 million record set in 2021.

Since then, the peak of the “big quit” has subsided, with the rate of workers leaving their jobs easing. Some reasons behind the fizzle are attributed to smaller wage growths for job switchers and a rebalancing of the labor market.

Chief executives are taking a chance on new opportunities as well.

“CEOs are looking around and thinking: ‘I prefer a position in another company,’ or ‘I prefer retirement. I don’t want to be a CEO anymore,’” Kirss said.

From the start of the year to September, 68 CEOs left their positions for new opportunities, Challenger’s report found. No reasons were offered for almost one-third of CEO exits, while 22% of the departures were due to retirement. 

Employees having a meeting in an office.
Employees having a meeting in an office.
Carlina Teteris | Moment | Getty Images

“In other cases, CEOs are being forced out,” the consultant said, attributing these circumstances largely to businesses being plagued with challenges like persistent inflation, tangled supply chains, and hiring difficulties — all of which have made it hard for CEOs to meet the objectives of their board of directors.

There are a number of business challenges such as persistent inflation, tangled supply chains, and hiring difficulties that have made it hard for CEOs to meet the board’s objectives.

CEOs stepping down seems less about retirement and more about burnout and the challenges of navigating an unprecedented workforce landscape.
LaShawn Davis

“Boards are looking at their CEOs’ performance, they’re looking at their peers, they’re looking at the market, and then they’re thinking the organization might be better off with a new CEO,” Kirss said. “I think it’s safe to assume that a lot of these changes we’re observing are actually performance-based, rather than self-selecting.”

Challenger also echoed similar sentiments.

“Companies are revving up for economic changes in the coming months. With the rise of labor costs and interest rates, companies are looking to new leaders,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.

The Challenger report highlighted that the highest CEO turnovers are happening in the government and technology sectors. Hospitals also reported a high number of CEO changes.

Like everyone else, CEOs are not spared from burnout.

“CEOs stepping down seems less about retirement and more about burnout and the challenges of navigating an unprecedented workforce landscape,” said founder and human resources consultant at The HR Plug, LaShawn Davis.

Burnout induced by work is commonplace and is defined by an increased mental distance from one’s job, alongside feelings of energy depletion and negativism. 

While businesses rally to ensure the mental well-being of their workforce, CEOs might find themselves isolated in their struggles.
LaShawn Davis

Davis highlighted that a CEO’s duties go beyond the typical 9-to-5 and round-the-clock attention. This leads to “a blurring of lines between professional responsibilities and personal life,” and the “relentless pace” does not just risk burnout, but also comes at a substantial toll on their families.

The consultant added that employees may not necessarily understand the dual pressures that CEOs face, caught straddling behind genuine intentions in addressing employees’ needs, but also bound by strategic and shareholder constraints. 

And amid a growing emphasis on employee wellness, there’s a notable gap when it comes to CEOs, Davis highlighted.

“Occupying the top position in an organization often comes with unique mental health challenges. While businesses rally to ensure the mental well-being of their workforce, CEOs might find themselves isolated in their struggles.”

Kirss expects the pace of CEO turnover to remain at high levels, or to trend higher and cited that many economic, political, and social challenges that company leaders face will likely stick around for a bit longer.

Another sign pointing to this could also be the shrinking tenure for CEOs over the past few years, Kirss noted. “That means the folks are turning over more frequently,” he said.

CEO tenure rates saw a sharp decline in the past 10 years. The median tenure among S&P 500 companies dropped 20% from six years in 2013 to 4.8 years in 2022, according to a study by Equilar published in July.

“This could indicate that we’re entering a new period of volatility in the C suite, particularly when it comes to CEOs,” said Kirss.

You won’t find the most popular careers among young people in Silicon Valley or on Wall Street. 

Media and entertainment is the top industry Gen Z wants to work in, beating tech, health care, and education, according to a new report from Samsung and Morning Consult.

The report, which surveyed over 1,000 Americans ages 16 to 25, found that Gen Z values flexible, creative jobs and careers where they can maintain a healthy work-life balance.

“Lifestyle is a big part of the attraction,” says Ann Woo, the head of corporate citizenship at Samsung Electronics America. “Media and entertainment is a creative industry that offers flexibility and self-expression, two of the most important attributes younger workers want in a job.”

To be fair, 2023 has been a tough year to work in media and entertainment. Both WGA and SAG-AFTRA members went on strike for several months and companies have had to grapple with declining ad revenue and unprofitable streaming businesses.

Entertainment alone has lost over 44,000 jobs since May, at least partly due to the strikes, the Bureau of Labor Statistics reports.

Even so, Gen Z is a social generation that places a high value on community and societal impact over job security in their careers, Woo points out.

In several surveys, including the one from Samsung and Morning Consult, strong work-life balance, learning and development opportunities, and creative freedom ranked as the top priorities for early career professionals.

Gen Z wants to become influencers — or have the freedom to change their minds

Gen Z is increasingly gravitating toward media and entertainment careers in part because more young people see social media influencing as a viable career path.

Some 57% of Gen Zers said they would like to become an influencer if given the chance, according to a recent report from Morning Consult. 

The rising popularity of platforms such as TikTok, Instagram, and YouTube has created a new class of entrepreneurs called “creators,” a group that includes freelancers, business coaches, gamers, and other professionals who share and monetize their expertise on these platforms.

“Extremely online” Gen Zers, Woo notes, quickly realized that “as soon as you start producing content that attracts a following, you can get paid and become a business.” 

Even as more young people turn their attention toward influencing and entrepreneurship, it doesn’t mean they’ll stay in these careers forever — and that’s part of the appeal, says Woo. 

Gen Z plans to switch careers at a faster clip than previous generations, and according to a new report from EY, nearly 40% of Gen Zers have both a job and side hustle, with some aiming to become self-employed and others hoping to retire early.

Of all industries, media, and entertainment have gained a reputation for being one of the most flexible, which is why Gen Z sees it as the most promising path to achieve their career goals “no matter how often those change,” adds Woo.

Target on Wednesday topped Wall Street’s quarterly sales expectations and blew past earnings estimates, as purchases in high-frequency categories like food and beauty helped prop up weaker customer spending. 

Shares of the company rose more than 10% in premarket trading on the news, partially a reflection of the stock’s drop so far this year.

Yet the big-box retailer stared down the same challenges that it has faced over the past year. Shoppers aren’t buying much more than the necessities. They’re hungry for lower prices. And when they do make purchases, they’re postponing them – such as waiting until the temperature drops to buy a pair of jeans or a sweatshirt, CEO Brian Cornell said on a call with reporters.

For the second straight quarter, Target’s comparable sales declined. The industry metric, also called same-store sales, takes out the impact of store openings, closures and renovations. 

Chief Financial Officer Michael Fiddelke said on the call with reporters that the Minneapolis-based company is “laser-focused on moving both traffic and sales back into positive territory.”

Yet he and Target’s leadership team cautioned that won’t happen this year, even as holiday shoppers hit stores and websites for decorations, gifts, and more.

Here’s what the retailer reported for the fiscal third quarter ended Oct. 28 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.10 vs. $1.48 expected
  • Revenue: $25.4 billion vs. $25.24 billion expected

Sales have slowed across the retail industry as consumers feel a budget crunch from elevated prices and choose to spend on experiences instead. Yet Target, which sells a heavier mix of clothing, home goods, and impulse purchases than key rivals, has been particularly squeezed. 

Plus, it has faced its own challenges. Target got blowback for a collection of merchandise for Pride month, a celebration of LGBTQ+ people and issues, that it has sold for more than a decade. It got hit by higher levels of organized retail crime. And it recently shuttered nine stores in major cities, blaming the closures on theft and threats of violence.

Target’s stock has suffered, too. It had fallen nearly 26% this year as of Tuesday’s close, with its value cut by more than half since the highs of the Covid pandemic.

In the fiscal third quarter, Target’s total revenue fell from $26.52 billion in the year-ago period. Comparable sales dropped nearly 5% year over year, as customers bought fewer discretionary items. Digital sales declined by 6% compared with the year-ago period.

Target CEO Brian Cornell: Shoppers are pulling back, even on groceries
Target CEO Brian Cornell: Shoppers are pulling back, even on groceries

While discretionary categories remain soft, Chief Growth Officer Christina Hennington said on the call with that trends “improved markedly” compared with the fiscal second quarter. She chalked up those better results to trendy merchandise, including Target’s new brand of kitchenware, fall fashion apparel for women, and jewelry from its new line with Kendra Scott.

The big-box retailer showed progress in building back its profits despite the sales challenges. Its net income in the fiscal third quarter jumped about 36% to $971 million, or $2.10 per share, from $712 million, or $1.54 per share, a year earlier.

The company said it expects the holiday quarter to look roughly the same, with comparable sales in a range of around a mid-single-digit decline and adjusted earnings per share of $1.90 to $2.60.

But Target’s significant earnings gain in the third quarter also reflected its weakness in the year-ago period, when it canceled orders and sold merchandise at deep discounts to clear through a glut of unwanted inventory. It took that aggressive action to try to get ahead of the last holiday season. 

Fiddelke attributed Target’s improved profits to better management of inventory and expenses, rather than stronger sales. Inventory levels declined 14% at the end of the quarter compared with the end of the year-ago period when the company had lots of excess merchandise.

“A store can run more efficiently when their back rooms are free of inventory,” he said. “A distribution center runs more efficiently, with fewer touches, when it’s not as full, too.”

As it shows progress with inventory, Target is now trying to boost sales in the critical holiday quarter.

This week, shoppers can already see Target’s website plastered with Black Friday deals. Yet Cornell said it’s too soon to weigh in on early holiday sales, saying the company is “watching the trends carefully.”

To drum up sales during the season, Hennington said the retailer will lean on new and exclusive merchandise – including thousands of gifts under $25. 

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