BIMCO’s Shipping number of the week:
2% US retail sales growth outperforms China and boosts transpacific trade
A strong comeback in US retail sales has replaced the 14.7% drop seen in April. In fact, US retail sales have been up since June compared with the same months last year, and only three months this year have seen lower retail sales than the corresponding months in 2019. Over the first three quarters of the year accumulated retail sales in the US have risen by 2.0%. This compares to 3.5% growth in 2019 and 4.3% growth in 2018.
On the other hand, China, which has seen a comparably stronger general economic recovery than the US, lags in terms of retail sales recovery. Where the US has had three months of lower retail sales this year than last, China has seen seven months of lower sales this year than 2019.
August and September are the first two months of growth in retail sales in China; +0.5% and +3.3% respectively. These two months of growth has not been enough for China to keep up with the accumulated year-on-year growth in the US. China’s total retail sales are still down 7.2% compared to last year.
Part of the difference in the shape and pace of retail sale recovery in the US and China can be linked to the stimulus packages adopted by both countries. While China opted for heavy spending within the area of infrastructure, boosting the dry bulk shipping market, the US focused on protecting personal income.
The latter, combined with the fact that consumers are spending less on services and travel, means that demand for goods was strong once shops reopened, boosting demand for container shipping and contributing to the current strength of the transpacific trade.
“The world’s two largest economies have chosen different paths in how to best protect their economies from the impact of the pandemic. While China’s general economic recovery has outperformed many other countries, retail sales are dragging behind.
For container shipping the recovery in US sales is more important, as these boost the long-haul transpacific trade whereas sales in China are much less reliant on container shipping,” says Peter Sand, BIMCO’s Chief Shipping Analyst.