Building Supply Center Retail Sales Jump 6.8% in April
Retail sales at building supply centers increased an unusually large 6.8% in April on top of an upwardly revised 4.0% plus gain in March. The nearly 12% two month surge was driven partly by several one-time factors but they can not account for all of the gain. There is very clearly a major rise in consumer spending underway with residential home improvements, both do-it-yourself and contracted work, apparently increasing strongly. This is consistent with recent higher volumes in construction materials orders, production and sales.
Part of the March-April gain in building supply center retail sales was the rebound from unseasonably poor winter weather which appeared earlier in other economic data. Another small part of the gain was appliance sales during energy efficient appliance rebate programs administered by states with federal stimulus money. This part of the gain will be reversed later in the spring. Also, a small part of the gain was due to higher lumber and metal prices. Lumber mills are now catching up with higher demand. This has already caused a small drop in spot lumber prices early in May. Hence there will be some pullback in May and June in the dollar value of retail lumber sales.
The March sales gain is inconsistent with the earlier Census Bureau report that construction spending for residential remodeling declined about 3% in March. The retail sales data is more reliable than the estimates of residential remodeling spending. The remodeling market and hence materials demand is likely now on the upswing even though this is not being captured in the initial estimates of construction spending.
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