NEWS & BLOG
Views: 16 Author: Site Editor Publish Time: 2022-07-01 Origin: Site
On May 17, The U.S. Census Bureau released retail sales data for April. At the same time, the St. Louis Fed also updated related retail sales and inventory data, which can see the changes in US consumption in the post-COVID-19 era. Has this change been specifically reflected in the volume of U.S. imports? Let's take a look together.
U.S. inflation is high, and the industry is generally worried that U.S. retail sales are starting to weaken. The data just released for April is in line with everyone's expectations. However, this is superficial data, and if the impact of inflation is taken into account, the actual level of consumption is worrisome.
Total retail sales rose 0.9% in April from March, relatively close to Wall Street's forecast of 1% and the fourth straight month of growth. Although 1% does not seem to be much, it is a continuation of the continuous growth of retail sales and eliminates everyone's hidden worries. As can be seen from the figure below, this is the highest amount in a single month in the past five years, which has exceeded the peak of last year's Christmas season in November. However, this amount does not factor in inflation. Compared with March last year, retail sales increased by 5.5% in March this year. If the record high inflation of 8.5% in March this year is deducted, real consumption even fell by 3%. This can be simply understood as, although the amount purchased has increased (because the unit price has increased), the quantity purchased may have decreased.
From the perspective of total retail inventory, retailers have been increasing their inventory since the fourth quarter of last year (October), and this trend has been maintained until now, and the inventory has also increased month by month, reaching an all-time high in March this year.
On one side is the increasing inventory, and on the other side is the retail sales that continue to maintain growth. Dividing the two yields little change in the inventory-to-sales ratio. Since the Christmas sales season last year, the inventory-to-sales ratio has been hovering at a historically low level of around 1.1. In December last year, it was very close to 1.2, because consumers spent ahead of schedule, but retail sales fell in December. Since January this year, retail sales have resumed growth, and the inventory-to-sales ratio has dropped back to around 1.16, which is still far below the pre-COVID-19 level of 1.4 in February 2020.
Large retailers admit that current inventory levels are high. Home Depot CFO Richard McPhail said on the first-quarter earnings call that their inventory in March reached $25.3 billion, 32% higher than March 2021. This is due to strong demand for home improvement, Home Depot's move to improve in-store inventory and late spring sales. Walmart also revealed that their total inventory was up 33% from a year earlier, in part because of higher food prices. At the same time, Wal-Mart has also stepped up its efforts to replenish inventory to avoid out-of-stocks, resulting in excessive inventory of certain products. Next, they'll lower their inventory with "markdown offers."
Auto and auto parts consumption rose 2.2% in April from March and fell 1.7% from a year earlier. Since March, the growth of furniture sales has slowed down significantly, recording less than 1% growth, which is almost the same as last year. Although the consumption of electronic appliances has increased month by month this year, it has decreased month by month compared with the same period last year, indicating that the peak period of such consumption has passed and is gradually returning to normal. The building materials category is similar to the furniture category, which is relatively stable on the whole, with a slight increase compared with the same period last year, indicating that the consumption of this category has also begun to return to a normal rhythm. The consumption of sporting goods (especially indoor fitness equipment) has been declining month by month, which is also the same as last year, because everyone either goes to the gym or engages in outdoor activities. The indoor fitness equipment just bought last year is not so soon to be replaced. The consumption growth is more obvious in the clothing category, which increases month by month and also increases significantly compared with the same period last year. The whole society resumes normal social activities, and the demand for dressing will naturally rebound.
Due to the above consumption changes, the inventory-to-sales ratio of various commodities began to show different trends. First look at home appliances. Because consumption has stabilized, the inventory-to-sales ratio has returned to the pre-epidemic level in January this year, and in March it was even higher than the level in February 2020. From this, it can be judged that there is not much demand for replenishing inventory of such commodities in the future.
Since the beginning of the epidemic, there have been insufficient sales of automobiles and auto parts, and the inventory-to-sales ratio has always been at a low level. Even in March, it is still far below the level before the epidemic. It is estimated that the import of goods here will continue to grow.
The inventory-to-sales ratio of building materials and horticulture began to rebound after falling to the bottom in March last year, and continued to rise after January this year. By March, it was very close to the pre-epidemic average of 1.85, indicating that consumption in this area began to stabilize.
To sum up: Although the U.S. retail sales continued to grow in March-April, taking into account the impact of inflation, actual consumption actually fell. The two most serious inflation is oil and food prices, which are not the main part of US container imports. The goods that have supported the import frenzy in the United States since the epidemic, such as furniture and household appliances, electrical appliances, building materials, etc., have begun to enter a normal consumption cycle, and the import volume will also begin to slow down.