Recent retail sales figures indicate that North America consumer demand for Far East imports may have plateaued.
Adjusted for consumer price inflation (CPI) and seasonality, US retail and food services sales declined 0.5% m/m in February while the last three months’ sales are down 0.4% compared to the previous three-month period.
As can be seen below, there has historically been a strong correlation between US retail and food services sales and North America container import volumes from the Far East.
Still, sales figures have surprisingly not dropped along with the consumer sentiment reading from the University of Michigan. The reading has dropped for three consecutive months and in March the preliminary reading is at its lowest level since November 2011.
The fact that retail sales have stayed up and personal consumption on services has recovered to near pre-COVID levels is testament to the strength of the US consumers. Personal consumption on services was down only 2.2% in January compared to February 2020 in seasonally adjusted and chained USD.
Compared to the average pre-COVID savings rate, an additional USD 2.4 tn has been added in personal savings in the US since March 2020. This will surely go some way to help maintain retail sales, however, whether it is enough to withstand depressed consumer sentiment and increased food and energy prices following Russia’s invasion of Ukraine remains to be seen.
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