Five categories, led by Furniture, have yearly sales gains that are double to triple the depressed levels of April 2020.
By Manuel Gutierrez, Consulting Economist to NKBA
Sales at retail stores in April were virtually unchanged from their March level of $620 billion, which could potentially signal an economic slowdown. While March had registered a pleasantly surprising gain of 10.7%, following several months of more modest ups and downs, the lack of follow-through in April was a bit concerning. Most economists had forecasted an increase of just under 1%.
One possible reason for the April stagnation is that the government stimulus checks had already been spent. However, consumers continue to sit on $4.1 trillion in savings. Although it’s reasonable to question why they aren’t spending those savings, periods of uncertainty such as what we has been happening over the past 15 months might lead to the caution.
Of further concern, if April’s inflation is taken into account — a period when consumer prices rose by 0.8% — retail sales in real terms actually dropped by nearly 1% for the month.
Monthly retail sales in April were surprisingly flat, following a solid 10.7% gain in March.
Despite the lack of overall sales growth, several categories saw an increase in April. Leading with the highest percentage change was Autos, with sales up 3.1% for the month (Figure 2).
Sales at Restaurants & Bars rose by nearly the same amount, up by 3% to $65 billion. Two other categories registered notable increases as well, Electronics & Appliances and Health stores, which grew by 1.2% and 1%, respectively.
These gains were offset by declines in several categories. General Merchandise stores had the largest drop, down 4.9% to $66 billion.
Sales at Building Materials stores, an area of interest to K&B-related businesses, fell 0.4% to $43 billion.
The decline at Building Materials retailers was surprising because it is one of the few categories whose sales were virtually unaffected by the pandemic shutdown.
Changes in sales compared to last year, shown in the right panel of Figure 2, should be taken with a grain of salt. That’s because it compared April 2021 to April 2020, which of course, is when the economic shutdown went into full swing, resulting in a misleading comparison.
The magnitude of the changes from last year is astonishing. For instance, topping the chart is Furniture stores, whose sales have tripled since April 2020.
Since a sales comparison against a year ago is deceptive, a comparison with 2019 is a more accurate representation of the current situation. Figure 3 does just that, displaying monthly sales trends over the last two years for a dozen major product categories.
The percentages within parenthesis next to each graph represent the total change compared to two years ago. For example, All Retail sales last month are 21% higher than they were in April 2019.
The highlighted area in light yellow represents the period with the greatest restrictions on businesses and on consumers’ ability to travel. It covers the months from February to June 2020.
As mentioned above, sales at Building Materials stores, the middle chart in the third row, saw a minimal drop during this period. Of all the categories detailed, it shows the most consistently upward trend line.
Internet & Mail Order sales is the other outlet type with strong sales throughout the highlighted period. Both categories continue to grow.
Sales at Grocery and Food & Beverages stores bucked the pattern of most, as the pandemic resulted in panic buying of items in short supply at a time when other categories were registering dramatic drops.
Charts:
