Retail sales increased in June

Auto dealerships, as well as online retailers and grocery, furniture and sporting goods stores, are among the companies that benefited from strong demand earlier in the pandemic as Americans stayed at home and having changed their consumption habits in response to government restrictions on businesses. Meanwhile, sales at retailers such as restaurants, bars, and clothing and accessories stores struggled.

“Fast forward to June, it’s almost a perfect switch,” said Tim Quinlan, senior economist at Wells Fargo. Consumers now think “anywhere but home,” which should benefit retailers in sectors that were hit hard earlier, he said.

Ann Leadbetter, co-owner of Meriwether Cider in the Boise, Idaho, area, said business has picked up at both cider house sites since the mask warrants were lifted earlier this spring. With that restriction relaxed, Ms Leadbetter said she felt comfortable returning to sit in the interior areas of the bar. She has also noticed an increase in tourists and events, which she says particularly helps the company’s location in downtown Boise.

“We expect a hike when the weather warms up anyway, but it has been even better than the usual seasonal hike we’ve had in the previous springs and summers,” Ms. Leadbetter said. “Even if it stabilizes, it will be better than in 2020, and it is already much better even than in 2019.”

Many economists have said they expect consumers to divert spending from purchases of goods, especially big-ticket items, to the service sector, as ending the pandemic-related restrictions allows the economy to open up more fully and to Americans to resume their foreign activities.

A Bank of America credit and debit card spend tracker showed consumers in June increased their spending in restaurants by 2.7% and on accommodation by 7.8% from May. , on a seasonally adjusted basis. Spending on clothing, general merchandise and in department stores also rose sharply, while spending on furniture declined.

“The sectors that have been bolstered by the pandemic are slowing down a bit, but not to a degree that I would worry about,” said Felipe Chacon, an economist at payments firm Square. “Household finances have been bolstered by a few rounds of stimulus spending, so that bodes pretty well,” for retail sales in general, he said.

The National Retail Federation, a trade association, in June raised its forecast for annual retail sales this year to $ 4.44 trillion to $ 4.56 trillion, from $ 4.33 trillion to $ 4.44 trillion. dollars previously.

Katherine Cullen, senior director of industry and consumer insight at the trade group, said the upward revised forecast reflected a strong recovery in the overall economy and better than expected retail sales growth.

She expects goods retailers that offer products related to service sector activities, such as travel, to see stronger growth in the coming months. She also predicts strong back-to-school sales, with families stocking up on items they didn’t need last year, as many students were learning remotely.

Still, some retailers have said difficulties attracting workers to vacancies and supply chain disruptions are putting constraints on businesses.

A semiconductor shortage helped drive auto prices up in June. The Federal Reserve said Thursday that US manufacturing output fell slightly last month, as production of motor vehicles and parts fell sharply.

Alan Guyes, co-owner of electronics retailer Audiotronics in Roanoke, Va., Said demand has been robust since last summer for items such as televisions, smart speakers and soundbars, with traffic in store having increased in recent months as the pandemic eased. But he said he often encountered customers looking for products that were unavailable or months behind schedule due to supply chain issues ranging from shortages of inputs to long shipping times.

“It’s frustrating, obviously. Some days it’s a lost sale. Customers are frustrated. We’re all used to being able to “just-in-time” anything, ”he said, referring to being able to get products when or about when they’re needed.

Federal Reserve Chairman Jerome Powell has said he expects upward pressure on prices to ease as supply chain problems and the friction associated with the rise in prices. power of the economy are resolved.

Wells Fargo’s Mr Quinlan said he didn’t expect price increases to deter Americans from spending just yet.

“Right now, consumers are price takers,” Quinlan said, noting that many households have funds available from their savings during the pandemic and the start of monthly child tax credit payments. expanded.

“The pent-up demand is so great,” he said. “Once that level of sugar wears off, you will start to see ordinary price sensitivity return to consumer behavior. “

Write to Amara Omeokwe at [email protected]