Retail market: surprising jump in sales in August; 4 new bankruptcies

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US retail sales rose unexpectedly in August after falling in the previous month, adding to economists’ confidence that consumer spending will continue to rise for the remainder of the year.

“Despite the risks to the economic outlook from the delta option and rising inflation, consumers appear to be on a solid footing,” said Lauren Henderson, business analyst at Stifel Investment Services, in an interview.

Retail and hospitality sales rose 0.7% month-over-month in August, after a revised 1.8% decrease in July, according to data released by the US Census Bureau on Sept. 16, compiled by Econoday’s forecasts.

Back-to-school shopping likely contributed to the surge as students across the country returned to face-to-face learning, economists said. Buyers also increased their spending on the Internet and in furniture and construction equipment stores, but cut down on restaurant dining and harder-to-find goods like electronics and automobiles.

Meanwhile, four retail companies filed for bankruptcy in the month through early September, the first filings in the industry since early June.

Retail sales

U.S. retail and food services sales rose to $ 618.68 billion in August, the Census Bureau estimates. That is an increase from a revised $ 614.31 billion in July.

Electronics and home appliance sales were down 3.1% m / m in August, while auto and parts dealer sales were down 3.6%. Year-on-year, retail and hospitality sales rose 15.1%, with increases in all categories.

Retail sales excluding catering increased by 0.8% compared to July and by 13.1% compared to the previous year. Apparel and apparel accessories sales grew 38.8% year-over-year, while gas station sales increased 35.7% year-over-year. Sales at auto and parts dealers decreased 3.6% m / m, but increased 10.7% year-on-year.

“Households are constantly adapting their spending mix to the COVID situation, supply restrictions and prices.” Gregory Daco, chief US economist at Oxford Economics, said in a September 16 statement.

The weak retail sales report for July heightened fears of a decline in consumer spending in August, but retail sales rose sharply instead, according to Stephen Stanley, chief economist at Amherst Pierpont.

Even if the pandemic dampens retail sales in September, Christmas sales and a possible end to the Delta variant surge in COVID-19 cases could result in an “excellent fourth quarter,” Stanley said called.

Monthly volatility is expected to continue until the end of the year. With federal expanded unemployment benefits ending Sept. 6, employment and income growth are the likely sources of support for further spending, said Stifel’s Henderson.

This will likely “lead to a somewhat uneven, albeit positive, consumption rate towards the end of the year and next year,” said Henderson. “In addition, bottlenecks in the supply chain will continue to have an impact on consumption in the short term, particularly on vehicle sales.”

bankruptcy

In the period from the end of August to mid-September there were four new bankruptcy filings in retail, which is the first filings in the industry for more than 2 months. New filers at women’s clothing manufacturer Lorna Jane USA Inc. and antique dealer Mallett, Inc.

According to S&P Global Market Intelligence, there were 21 retail registrations so far in 2021, less than half the amount for the same period in 2020.

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With fewer businesses going bankrupt in 2021, consumer businesses, including retailers, will continue to seek judicial protection in higher amounts than other businesses.

Consumer prices

According to the US Bureau of Labor Statistics, consumer prices rose 0.3% in August compared to the previous month. On an annual basis, prices rose by a seasonally adjusted 5.3%. New car prices rose 1.2% month on month in August and 7.6% year on year.

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employment

Retail employment was 15.32 million jobs in August, 0.2% less than July 15.35 million, according to data from the Bureau of Labor Statistics.

Jobs in clothing stores and gas stations each fell 0.4% in August versus July. Employment in the motor vehicle and parts trade rose by 0.2%, in building materials and garden shops it fell by 0.9%.

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vulnerability

An analysis of the one-year probability of default scores identified 15 public retailers with scores ranging from 9.2% to 32.3% and corresponding implied credit scores ranging from “ccc-” to “ccc +”. The probability of default scores represent the probability that any company will default on its debt in one year, based on financial reports and taking into account various macroeconomic factors.

Nutritional supplement retailer Merion Inc. topped the list with a 32.3% probability of failure. The company did not respond to a request for comment.

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