“But right now, that is not the pattern seen and there are likely a multitude of reasons, one being the stimulus checks boosting spending, another being how the consumers will be using, or not using, the added savings. Lars Jensen, CEO of consultancy Vespucci Maritime, told American Shipper, “Eventually, it appears highly likely that consumption patterns will indeed get back to normal, meaning more spending on services and less on goods than we have seen in the past 12 months. Why is strong goods spending coexisting so easily with strong services spending, keeping U.S. Making the restocking outlook even more challenging: Non-seasonally adjusted retail sales ex-vehicles and parts in May was up 3.6% from April. Census Bureau inventories adjusted by Miller using implicit price deflators derived from the Bureau of Economic Analysis inventory dataĪccording to Miller, “Given current capacity constraints, especially with COVID-19 outbreaks affecting Chinese exports, I cannot see a scenario where retailers are able to build inventory-to-sales to pre-COVID levels by October and November. That’s the second-lowest level ever, just a single basis point above the all-time nadir of 1.03 months in March. This dataset shows that real inventories have rebounded to pre-COVID levels, but the inventory-to-sales ratio remains historically low.Īs of the end of April - a month when credit card data showed much higher spending on services - retail inventories were still just 1.04 months of sales. Jason Miller, associate professor of supply chain management at Michigan State University’s Eli Broad College of Business, plotted retail inventory-to-sales levels through the end of April excluding vehicles and automotive parts (these categories excessively skew the numbers in relation to containerized goods). This notably higher spending on services has yet to dent spending on goods, and consequently, containerized import demand. Data is seven-day moving average (Charts: 1010DATA) Inventory-to-sales ratio historically low Data is seven-day moving average (Charts: 1010DATA)ġ010Data shows a similar rebound in restaurant spending, also since late March, with y/y gains peaking in April.Īs of Monday, spending on casual dining, fast casual and fine dining was up 76%, 30% and 308% y/y, respectively Purple line is y/y change in spending brown line is y/y change in visits dotted line is average y/y change in value of transactions. Purple line is y/y change in spending brown line is y/y change in visits. As of Monday, this dataset showed that spending on airlines, car rentals and hotels was up 356%, 285% and 270% y/y, respectively. This data shows a year-on-year (y/y) rebound in domestic travel spending since late March, with particularly high y/y numbers in April (given that last year’s April spending was depressed by lockdowns). Real-time credit card usage is tracked by 1010Data on a platform powered by Exabel. So many portions of the supply chain are so far behind that it’s not going to happen in the next six months.” Consumers spend more on services ![]() ![]() ![]() Paul Bingham, director of transportation consulting at IHS Markit (NYSE: INFO), told American Shipper, “We’re too far into the year without having recovered to get out of this in 2021. Inventory-to-sales ratios remain stubbornly low - so low that it now looks inconceivable that they can revert to normal this year. Ergo, with more vaccinations and fewer hospitalizations, Americans will resume spending on services and consequently have less to spend on goods, the pandemic-induced driver of import demand will wane, spot rates will fall, and the market will return to some semblance of normality.Īnd yet, Americans’ spending on restaurants, air travel and other services has rekindled but there’s still no evidence of a drop in spending on goods.Ĭontainer imports remain at peak volumes. Greg Miller, Senior Editor Follow on TwitterMonday, June 21, 2021 5 minutes readĪ widely held theory on pandemic spending is that container imports surged because Americans bought a lot more goods when COVID prevented them from buying services. Retail inventory-to-sales levels still historically low despite higher spending on services
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