U.S. MANUFACTURING AND TRADE INVENTORIES VS. UNEMPLOYMENT RATE
- U.S. GDP grew 3.6% in the third quarter according to adjusted figures released by the U.S. Commerce Department. A boost in inventories or merchandise on hand accounted for half of the GDP growth in the third quarter.
- Growth in business inventory can mean household spending declined leading to higher inventories remaining in warehouses and stores. However, a positive scenario for higher inventories is business projecting strong demand in future quarters. Recent economic indicators point to the latter. Fewer jobless claims and a pickup in employment indicate improving corporate sentiment. The U.S. economy added 203,000 jobs in November which continues seven months of solid gains and raises hopes that recovery is ready to take off. Consequently, the national unemployment rate declined to 7.0%, the lowest in five years.
- Despite anemic in-store sales over the black Friday weekend, e-commerce sales reached all-time highs, signaling consumer spending habits shifting to online purchases. Increased inventories, job growth, and pickup in e-commerce sales are all positive indicators of demand for industrial real estate. With large e-retailers continuing to sign big-box leases and many brick and mortar retailers looking to get into the e-commerce game, demand can only pick up, leading to continued positive real estate fundamentals in the coming year.