Strong April retail sales keep the good economic momentum moving along

As more people continue to receive the COVID-19 vaccine, coupled with more pockets of the United States economy reopening, it did not come as a huge surprise that United States retail sales, for the month of April, which were issued late last week by the U.S. Department of Commerce and the National Retail Federation (NRF), turned in another solid performance.

Starting with Commerce’s data, April U.S. retail sales—at $619.9 billion—were essentially flat with March’s $619.1 billion. This tally marked a 51.2% annual gain [well ahead of March’s also impressive 29% annual gain], with total retail sales, from February through April, up 27.1% annually, a period which was dealing with the early issues pertaining to the outset of the pandemic, which saw most people remaining at home, sheltering in place and following social distancing guidelines, too.

Looking at specific sectors, Commerce reported that April retail trade sales were off 0.3% compared to March and up 46.1% annually, with clothing and clothing accessories stores seeing a massive 726.8% annual increase, and food services and drinking places up 116.8%, with the latter two sectors seeing big gains driven by the loosening of COVID-19 restrictions.

Like Commerce, the NRF also reported flat April sales compared to March and significant annual gains. And the group observed that March and April’s annual gains “were unusually high,” as most stored were ordered to close down around mid-March 2020, with annual sales growth intact for every month going back to June 2020, mixed in with some sequential declines along the way.

As for its own calculation of retail sales, which does not include sales from automobile dealers, gas stations, and restaurants, NRF said that April retail sales were off 1.3% on a seasonally-adjusted basis compared to March and rose 28.8% unadjusted annually, topping March’s 18.9% annual gain and trailing the 7.6% gain from February to March.  

“The economy and consumer spending have proven to be much more resilient than many feared a year ago,” NRF Chief Economist Jack Kleinhenz said in a statement. “[The] year-over-year numbers are off the charts in some categories, reflecting the disparity between retailers that could remain open a year ago and those that were forced to shut down. Consumers may have tapped the brakes slightly in April compared with March, but it was like going from 100 mph to 85 mph compared with last year. The fuel from stimulus checks gave a strong boost to spending in March and the fact that April numbers are very close shows spending is clearly going forward and still strong.”

Retail sectors showing big increases in April, on an unadjusted annual basis, according to NRF, included: furniture and home furnishings up 199.2%; clothing and clothing accessory stores up 711.3%; sporting goods stores up 155%; and electronics and appliance stores up 133.9%, among others.

The strong retail sales performance in April was highlighted in a research note issued by Naveen Jaggi, President Retail Advisory Services, JLL.

“While strong increases in sales cooled since March, the YOY comparison shows a robust rebound,” wrote Jaggi. “Retail sales saw record drops at this time last year with the fear of the unknown; the 726.8 percent YOY increase in clothing and accessories comes as no surprise this year. So, while April did not repeat March in terms of historic gains, spending should continue steadily as vaccinations increase and more states lift COVID-19 restrictions. Additionally, the employment situation release for April failed to meet expectations, with net job gains falling well below the 1,000,000 consensus expectation, which could have led to consumer anxiety around spending.”

Jaggi also explained that the April sales bring further bright spots to food service and drinking places, noting that as further restrictions are lifted, like dining capacity limits, and consumer confidence continues to make gains, this trend can be expected to continue.

“Overall, consumers are feeling optimistic about 2021 and as we near summer the consumer willingness to go out, socialize, shop, and eat will likely continue a steady increase across retail sales categories,” wrote Jaggi.

And Neil Saunders, Managing Director of GlobalData, commented in a research note, that logically, a strong rise in sales was to be expected.

“In April last year we were in the depths of the pandemic with lockdowns across the country temporarily closing around 61.8% of all retail shops in the country, some 263,250 in total,” he wrote. “Many consumers found themselves out of work and this, added to the general uncertainty, severely suppressed spending on non-essential products. Against this backdrop, April 2021 was always going to be a solid month. However, retail sales have more than recouped all the ground lost in April last year. Compared to April 2019, retail sales are up by 21.7% or $110 billion. Some of this is latent demand materializing. For over a year, consumers have reduced their spending on categories like apparel and they are now playing catchup—refreshing their closets as society reopens and activities like travel and entertainment become realistic… On top of this there continues to be a diversion of spend from activities like vacations and commuting—at least for now.”

Saunders also observed that this surge in demand is supported by two economic fundamentals:

• an incredibly elevated level of savings which means many households have the financial ability to splurge, should they wish to do so; and
• the lingering impact of the stimulus checks which has helped the budgets of some households, especially those towards the bottom of the income spectrum

The April retail sales numbers are clearly encouraging, given what things looked like a year ago, at this time, coupled with an incredible amount of uncertainty, too. Things are fortunately looking much better a year ago and for good reason, to be sure. This bodes well for shippers, carriers, and 3PLs alike that are involved with the many links of the retail supply chain. Will things continue at these levels for the foreseeable future? That is hard to say, but these numbers are, in a sense, making up for lost time, too. Either way, they are encouraging and represent optimism and hope, two things that were in pretty short supply a year ago at this time.