But much higher one-month and 12-month
comparisons appear to be ahead for many construction PPIs. Today the price
of West Texas Intermediate crude oil
on the New York Mercantile Exchange rose for the fifth straight day, to a
record of more than $86 per barrel. The national average retail price of on-highway diesel fuel was
unchanged from last week at $3.04 per gallon but up 21% from a year ago, the
Energy Information Administration reported today. Copper futures are also rising and are more than 10% higher than a
year ago.
Recent reports suggest a mixed outlook for retail construction. Retail and
food services sales rose 0.6% in
September, seasonally adjusted, and 5% from a year earlier, the Census Bureau
reported on Friday. The gain was considerably larger than reports earlier last
wek of “same-store” sales for major chain stores. The Census numbers
include an estimate of sales from new stores, smaller retailers, and categories
not included in the chain-store reports (such as automobile dealers, gas
stations, food and beverage stores, restaurants, and mail-order and online
retailers), making them potentially a better indicator of demand for retail
construction. Kohl’s Corp. opened 80 stores on
October 3 and said it plans to open 566 outlets over the next five years,
increasing its store count by more than 67%. The Wall Street Journal
reported on October 3 that British retailer Tesco PLC plans to open its first
five stores in southern California on November 8 and to have 50 stores in
western states by the end of February. But Wal-Mart has halved its expansion
plans. The Journal reported on Wednesday, “U.S. strip-mall vacancies only inched up in the third quarter, but still
hit a 5-1/2 year high...Rentals of retail space in weak housing markets are
getting hit disproportionately hard [such as Sacramento, Orlando,] Miami,
Tampa, Phoenix,” and Orange, Riverside and San Bernadino Counties in
California. “In Florida, sales-tax collections have slipped [2.7% in August and
6.1% in July], signaling falling spending…according to the Florida Department
of Revenue.” But “retail in most of the rest of the country is still solid….Shopping-mall vacancies have shown no
impact from the housing problems yet. Because of malls’ long lease terms,
economic problems typically take 18-24 months to show up,” much longer than at
strip malls.
