Rising take-home pay fosters retail momentum.
Increased discretionary income stemming from tax cuts and a tight labor market are starting to materialize. Inflation-adjusted core retail sales recorded a 2.5 percent year-over-year increase for the fourth straight month, following an average of 2 percent expansion the previous 18 months. E-commerce sales continue to propel retail activity, benefiting the industrial sector as over 200 million square feet of space is expected to be leased this year, dropping the national vacancy rate to 4.9 percent. Building materials sales also ascended at a healthy clip, logging a 4.8 percent boost on an annual basis, well above the 3.7 percent March year-over-year average of the past two decades. This growth can be largely attributed to do-it-yourself home improvement projects.
Retail heavy weights plan expansion.
Miscellaneous store sales, which include florists, gift, office, used merchandise tenants, among others, posted a 9 percent year-over-year increase in March, compared with the 20-year monthly average of 1.7 percent. Goodwill has supported this sector’s accelerated growth, as the company plans to continue expanding its retail operations as well as make an entry into e-commerce this year. Conversely, sporting goods, hobby and book sales continued to falter, reporting a 5.6 percent yearly decrease. Despite the sector’s weakened performance, Dick’s Sporting Goods plans to open about 20 stores in 2018, a slower pace than what they initially announced. Dick’s expansion may accelerate if the company is able to acquire vacated Toys ‘R’ Us space at discounted prices.