Retail Sales Decline, Construction Costs Staying High Into 2023, Import Prices Rise
Retail Sales Decline
U.S. retail and food service sales dropped 0.3% month over month in May to $672.9 billion, the Commerce Department reported Wednesday, underscoring earlier reports from big store chains now seeing consumers spend less on nonessential items and much more on high-priced necessities such as gasoline.
On the retail side, sales were down 0.4% from the prior month but still up 6.9% from May 2021. May spending at gasoline stations was up 4% from the previous month but up 43.2% from the prior year.
Restaurants are generally having a better time than some stores, as pandemic-weary customers get out of the house more often. Food service sales were up 0.7% from the prior month and increased 17.5% from May 2021.
Big year-over-year retail gainers in May included sellers of building and gardening supplies, up 6.4%; grocery stores, up 8.7%; and clothing stores, up 6.1%.
Notable decliners included motor vehicle and auto parts dealers, down 3.7%, and electronics and appliance stores, down 4.5%.
Construction Costs Staying High Into 2023
Global construction is expected to remain robust into 2023 and beyond, fueled by publicly funded infrastructure projects, but it will also be increasingly expensive, according to consulting firm Oxford Economics.
“This investment is coming at a time when global supply chain disruptions are hampering the delivery of construction materials, and tight labor markets are limiting the supply of labor,” the U.K.-based economic analysis firm said in a Wednesday statement accompanying a new research report.
The firm’s economists said the resulting supply-demand mismatch has driven up construction expenses, “increasing the risks of cost-blowouts as well as project delays and cancellations.” While the global value of residential construction projects rose 2.3% from the prior year in 2021, single-family construction costs increased nearly 15% in the U.S., and closer to 25% in Canada.
A 2021 boom in residential construction in advanced economies, particularly in the Americas, has run up against lingering pandemic-induced supply chain disruptions that have only been exacerbated by lockdowns in China and the war in Ukraine. That means supply and other project costs “are likely to remain elevated for some time,” Oxford analysts said.
Consultants noted the long-term upside is that governments around the world responded to the pandemic by fast-tracking major infrastructure projects, with the U.S. planning $500 billion in new spending over the next decade for highways, railways and bridges.
Import Prices Rise
Import prices, which can affect consumer prices and real estate demand, rose 0.6% from the prior month in May, the Labor Department reported Wednesday. As with other parts of the economy, higher fuel prices were a big contributor to the month-over-month increase, which followed a 0.4% rise in April and a 3% rise in March.
May’s year-over-year increase in import prices was 11.7%. Fuel import prices rose 7.5% for the month and 73.5% for the year, the largest 12-month increase since the 87% rise seen in November 2021.
U.S. export prices, which help boost the U.S. economy as the costs aren’t being paid locally, rose 2.1% for the month and 18.9% for the year, the biggest annual increase since 12-month changes were first tracked by the government in September 1984. Agricultural export prices rose 16.7% for the year, led in May by soybeans, corn and wheat.
Also Wednesday, the Commerce Department reported revised April numbers showing the total value of manufacturers’ sales and shipments topped $1.8 billion, up 0.4% from the prior month and up 13.7% from April 2021.
Manufacturers’ inventories were valued at approximately $2.3 trillion at the end of April, up 1.2% from March and rising 16.6% from April 2021.