Consumers spent 1.2% more on May than they did the month earlier to total $335.8 billion, despite concerns that high energy prices would close wallets. According to the Dept. of Commerce’s advance report, consumers are buying more cars, and doing more shopping for food, clothes, electronics and department stores.
This marks an 8.9% year-over-year increase.
Robust consumer spending combined with rising fuel pump prices indicate that the economy has enough steam to continue its growth, Chris Brady of Commercial Motor Vehicle Consulting (CMVC) told Fleet Owner.
The overall increase in consumer spending was driven by motor vehicles sales, the largest slice of the economic pie, which increased 2.7% to $78.8 billion. Motor vehicle sales comprise just over a fifth of overall consumer spending.
Of the segments, gas stations posted the most significant increase, at 4.0% to $26.0 billion. That increase is largely attributed to rising gas prices.
Consumers are investing more in construction, home improvement and gardens as dealers posted a 1.4% increase in sales to $30.5 billion. General merchandise sales were up 1.3% to $41.9 billion. Grocery stores and liquor stores have gained 1.0% to $43.9 billion. Clothing stores were up 0.9% to $15.7 billion.
Not all segments posted gains, however. Furniture sales were down 0.6% to 8.6 billion. Consumers went out to eat and drink less, as food services and drinking places declined 0.3% to $31.9 billion.
“I think there’s enough momentum in the economy with employment expanding, and shrinking inventories, to offset the impact of higher energy prices,” CMVC’s Brady said.
Overall this is a good time for trucking, Brady said, pointing to retail sales driving local and regional freight movement, low inventories, increasing manufacturing activity, and tight carrier capacity. Carriers are able to pass along high costs, namely steeper fuel prices as a result, he said.
“You have carrier capacity that is relatively tight, and since capacity is tight they can pass along fuel prices,” Brady said. “Fuel prices used to kill carriers— but with trucking in such high demand, that’s not happening today.”
And the Institute for Supply Management (ISM) recently released a manufacturing report stating the purchasing manager’s index (PMI) in May rose 0.4% over the month earlier, an indication that an already strong manufacturing sector is growing “at a faster rate.”
“Carrier capacity will remain tight if the economy continues to grow throughout the year,” Brady said, adding that strong manufacturing output coupled with brisk sales means the supply chain is moving. “With retail sales expanding, there won’t be any bloating of inventory in the short term.”
Overall, all indications from the manufacturing to the sales rung of the supply chain point to great news for trucking throughout the year, Brady said. “I’m looking for increased shipping volumes, and freight volumes as a result of the growing economy.”