09/22/2022
Accelerated hiring and lower prices at the gas pump aided spending in July, with core retail sales now up 29 percent relative to pre-pandemic. Factors including the addition of 528,000 positions, and a 7.7 decrease in gas prices have helped offset the impacts of historically low consumer sentiment, and may be contributing to signs of improvement.
Core spending benefits from restaurant and bar performance. July hiring was highlighted by job creation at food service and drinking places, with 74,100 additional personnel. Last month, prices for food at home rose 13.1%, while costs for food away from home grew 7.6%. This disparity is allowing dining out to stay a comparative option, reflected in the 11.6 percent year-over-year gain in spending at restaurants and bars in July.
Online retail sales rose 2.7 percent in July, with non-store spending accounting for nearly 23 percent of all core spending, the highest share since the initial months of the health crisis. The higher percentage of overall consumer spending accounted for online is driving demand for industrial space.
Property metrics reflect solid space demand. A record job count and historic core spending are encouraging vendor expansions. Recent investment activity suggests investor confidence in future retail performance is widespread. Though trading showed signs of moderation in the second quarter, the number of closings was on par with the prior five-year quarterly average, an encouraging sign amid rising interest rates and more stringent underwriting.
