Consumers do not buy molds, but they do by a lot of molded parts. They usually do not realize they are buying molded parts. They think they are buying autos, appliances, or packaged goods. But to those of us in the industry, they are buying molded parts. And if they start to buy a steadily increasing amount of molded parts, then sooner or later someone is going to need more molds. So it makes sense for moldmakers and other industry watchers to monitor the trends in the retail sales data that are compiled and reported each month by the Census Bureau.
The latest monthly report was released this morning and it includes data through the month of October. For the year to date, total retail sales in the U.S. are of 4.2% when compared with the same period in 2012. The long-term average for annual growth in retail sales is in the range of 4% to 5%, so from a historical perspective 2013 is just about average overall. However, there is a wide divergence of growth rates amongst the various categories of retail establishments.
The categories with the strongest growth so far this year are online retailers (i.e. Amazon.com) and motor vehicle dealers. Both of these segments are enjoying an increase of greater than 10% when compared with last year. Building material and supplies stores are also enjoying solid growth – up nearly 7% from 2012. Total receipts at furniture and home furnishing stores are running 4% ahead of last year.
Most of the other categories of retail establishments (that represent large end-markets for molded products) are growing in the range of 2% to 4% this year. These include: restaurants and bars (up 4%); sporting-goods stores (up 4%); food and beverage stores (up 3%); and finally, health and personal care stores (up 2%). One other category of interest, receipts at electronics and appliance stores are up less than 1%.
So it looks like Americans are willing to spend money on big-ticket items such as autos, but they are restricting their purchases on many other types of discretionary goods. In other words, they are saving up their money to replace worn-out cars, but they are not carrying large balances on credit cards to pay for many other types of goods. Spending for necessities such as food and healthcare products is growing at a rate that is a bit below the long-term average.
It is likely this type of spending behavior will persist for at least another year or so. Household income growth is stagnant, and this trend will not improve until the trend in the employment data starts to accelerate. I expect the fundamentals that affect retail sales to improve moderately in 2014, with more rapid improvement coming in 2015 and 2016.
One other trend that is worth noting is that sales at gasoline stations are actually down by about 1% so far this year. Lower gasoline prices would be a bonus for almost every consumer. Less money spent on energy products means there is more money to spend on durable manufactured goods and packaging products.