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Retail sales continue to show modest gains

By Jeff Berman, Group News Editor
July 15, 2014

The theme of flattish sequential retail sales gains remained intact from May to June, according to data released today by the National Retail Federation (NRF) and the United States Department of Commerce.

Commerce reported that June retail sales at $439.9 billion were up 0.2 percent over May and up 4.3 percent compared to June 2013, and total retail sales from April through June are up 4.5 percent annually. And excluding automobiles, Commerce said total retail and food services in June were up 0.4 percent over May at $351.9 billion and up 3.7 percent compared to June 2013. Commerce added that the April to May 2014 percent change was revised from +0.3 percent to +0.5 percent.

The NRF said that June retail sales, which exclude automobiles, gas stations, and restaurants, were flat on a seasonally-adjusted and sequential basis for the second straight month in May, and saw a 3.0 percent unadjusted annual increase.

“June retail sales reinforce the renewed strength of consumer confidence and marked increases in retail employment over the last few months,” wrote NRF Chief Economist Jack Kleinhenz in a blog posting. “The upward revisions in April and May have provided positive signs of momentum for second quarter growth after a dismal first quarter. Retail sales gains were seen in many categories including electronics, health and personal care, clothing and apparel, sporting goods and general merchandise. The downshift in building and furniture sales continue to reflect the fits and starts of the housing market.”

As previously reported, with retail sales growth still relatively modest, there still remains a mixed bag of signals and headwinds on the economic front, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.

And these things continue to occur, though, against the backdrop of sluggish GDP growth and general uncertainty regarding the economy.

Supply chain stakeholders describe the current market environment as it relates to retail supply chains as steady for the most part. With the impact of the harsh winter weather in the background, shippers are rebuilding inventories in time for the second half of the year in advance of peak season.

As previously reported, Stifel Nicolaus analyst John Larkin said at last April’s NASSTRAC conference that it is reasonable to expect retail sales to be somewhat tempered as a large amount of U.S. consumers are still recovering from the Great Recession. He supported that thesis by explaining that housing is at about 40-to-45 percent of the peak levels from January 2006, coupled with a year-to-date decline in automobile sales although production is up.

But Charles W. “Chuck” Clowdis, Jr., managing director, Transportation Advisory Services for IHS Global Insight noted there is reason for optimism in viewing these new retail sales numbers.

“There are ‘positive pockets’ indicating that the pent-up demand is coupling with necessity spending to at least continue the slow and positive trend in consumer spending,” he said. “We see more people dining-out, at more up-scale restaurants than in the past several years; a good trend for the dining establishments and the carriers that transport food products.  Now if this trend spreads with lowering unemployment figures the economy may become robust at 2004-6 levels again.  Baby steps are better than falling backward!”

Sterne Agee Chie Economist Lindsey M. Piegza wrote in a research note that retail sales growth still has a ways to go before true improvement in the numbers can truly be declared.

“Since the short-lived rebound at the end of Q1, retail sales have shown little indication of sustainable momentum,” Piegza wrote. “While still positive, monthly gains in spending have weakened to just a fraction of the gains seen in February and March, pulling the annual gain down to nearly half of the pace seen just a year or two ago. With job gains dominated by part-time, temporary and low-wage employment, wage pressures are virtually nonexistent, offering the consumer no additional spending power out in the marketplace. Those hopeful warmer weather alone would spark an upward trend in consumer spending have thus far been disappointed.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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