Top Takeaways:
- Building Materials category sales are up 9 percent year-over-year, but still lag peak reached in March
- Annual growth for the category is about half the overall Retail Sales gain of 18 percent
- Restaurants & Bars easily lead all other retail store categories with a 37 percent annual gain
By Manuel Gutierrez, Consulting Economist to NKBA
Sales at Building Materials stores rose just 0.7percent in November, to $40.6 million for the month (rounded up to $41 million in the chart.) This is the fourth consecutive monthly gain, following declines in the preceding four months. Despite the increases, November’s sales volume still lags the peak reached back in March, when sales for the month were $43.6 million.
Compared to a year ago, sales are 9 percent higher. As can be seen in the right panel of Figure 1, annual sales changes at Building Materials stores have hovered between six and ten percent over the last seven months. It can also be seen that category store sales mimic the pattern of All Retail stores, albeit at lower rates. Over the last year, overall retail sales growth has been roughly twice as high as the Building Materials component.
Until now, growth in building materials could be attributed to the residential sector, which has grown much faster than non-residential. Spending for residential construction is up 17 percent from last year while the corresponding spending in nonresidential projects is up just 3 percent.
Following an 11 percent surge in March, overall retail sales have been averaging an anemic 0.3 percent monthly gain for the past eight months.
Although total retail sales for all types of stores hit an all-time high of $640 billion in November, they were just a disappointing 0.3 percent higher than the previous month. In fact, as shown in Figure 2, retail sales have grown very little since March of this year, when they had surged by 11 percent to reach a monthly total of $623 billion.
That 11 percent increase in March was the second highest since this data was first collected, in early 1992. It was only exceeded by the 18 percent gain in March of last year, when business shutdown mandates were relaxed and consumers returned to shopping in droves.
Meanwhile, sales growth over the last eight months has averaged just 0.3 percent per month.
Among individual store categories, only four areas exceed the overall 0.3 percent monthly growth. They are Sports, Food, Restaurants & Bars and Building Materials stores (Figure 3, left panel). However, the largest sales areas, Auto dealerships and Online & Mail Order, which jointly account for nearly a third of sales (32.7 percent in November), did not increase for the month.
The store types with the largest declines, Electronic & Appliance stores (down 4.6 percent for the month), and Department Stores (-5.4 percent) represent a relatively small share of retail sales. Combined they are just 3 percent of the total.
Compared to last year, as mentioned earlier, Restaurants & Bars easily posted the biggest gain, up over 37 percent. Three other store types exceed the overall average of 18.2 percent – the dashed vertical line in the right panel of Figure 3. They include Department Stores with sales of $11.8 billion, up 24.9 percent from last year.
Sales at Department Stores have recovered from the pandemic shutdown collapse, but they still lag pre-pandemic levels. They will likely continue their secular decline.
Other stores posting above average annual gains are the Miscellaneouscategory, with $15 billion in sales in November, up 23.8 percent, and Sporting Goods Stores, up 20 percent. Somewhat surprisingly, Health Stores have the lowest annual growth at 7.2 percent.
Charts:
