Jun
06

Rising E-Commerce Drives Industrial Demand

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ecommerce2Economic activity momentum dropped in the first quarter of 2016. Real gross domestic product (GDP) advanced at an annual rate of 0.5 percent, according to the Bureau of Economic Analysis’s first estimate. International trade felt the impact of the stronger dollar in the fourth quarter. The corporate outlook took a downward turn, with business investments dropping 5.9 percent on an annual basis in the first quarter. Businesses cut back investments in equipment and commercial real estate to the tune of 8.6 percent and 10.6 percent, respectively. With the dollar rising, international trade bore the brunt of a weakening economic environment. Exports declined by 2.6 percent, while imports moved sideways with a 0.2 percent annual rate of growth.

However, as more consumers shift to on-line purchases, distribution centers play a greater role in fulfilling orders, strengthening industrial demand. Retail e-commerce sales totaled $92.8 billion in the first quarter of the year, a 15.2 percent gain compared with the same quarter of the prior year, according to the Census Bureau. E-commerce sales represented 7.8 percent of total retail sales.

The first quarter employment landscape offered a few high points. Payrolls rose at a solid pace, adding 609,000 net new jobs. Average weekly earnings of private employees rose by 2.1 percent in the first quarter of this year, compared to one year earlier. With demand for industrial properties rising, transportation and warehousing employment gained 22,200 new positions, while wholesale trade employment rose by 24,700 jobs.

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