RAPAPORT... US retail sales could face growth challenges in February as supply chains are impacted by shutdowns at Chinese factories due to the coronavirus epidemic, the National Retail Federation (NRF) said.
Imports of goods from the mainland will see a sharper-than-usual drop, with US retailers struggling to shift sourcing to other countries.
“February is historically a slow month for imports because of Lunar New Year and the lull between retailers’ holiday season and summer, but this is an unusual situation,” Jonathan Gold, NRF vice president for supply chain and customs policy, said last week. “Many Chinese factories have already stayed closed longer than usual, and we don’t know how soon they will reopen.”
Imports at the US’s major retail container ports are estimated to reach 1.41 million 20-foot equivalent units (TEU) in February, down 13% from the previous year, while March is expected to come in at 1.46 million TEU, a drop of 10% year on year. Prior to the coronavirus outbreak, February imports were forecast to be 1.54 million TEU, with 1.7 million TEU predicted for March.
“Projecting container volume for the next year has become even more challenging with the outbreak of the coronavirus in China and its spread,” said Hackett Associates founder Ben Hackett. “It’s questionable how soon manufacturing will return to normal.”
In January, US retail sales increased 2.7% year on year, as consumer sentiment remained strong prior to the widespread outbreak.
“Consumer confidence increased in January following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, senior director of economic indicators at The Conference Board, which measures US consumer confidence.
While the NRF noted US retail sales were starting the year on a strong footing, it’s not clear what effect the coronavirus will have on February sales. As the US-China trade war escalated in September, US retail spending fell 0.1% compared with the previous month.
Jewelry-store sales slipped 0.3% to $33.37 billion in 2019, amid the trade war and other socioeconomic factors, according to the US Census Bureau.
Image: A couple shopping at the mall. (Shutterstock)
Source: Rapaport 17-2-2020
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