With consumer confidence and spending on the rise, retail sales increased in May, potentially leading to a greater need for inventory financing in the near future.
According to the National Retail Federation, May retail sales increased 4.8 percent year-over-year, slightly higher than the figure reported by the U.S. Department of Commerce. When compared to the previous month, sales were up 0.6 percent.
"The American consumer continues to drive the U.S. economy," said NRF president and CEO Matthew Shay. "In spite of fluctuating gas prices, severe weather in much of the country and fiscal policy uncertainty, consumers continue to demonstrate an inherent resiliency and flexibility. We should never underestimate the role and strength of the American shopper or the retailers that serve them."
NRF chief economist Jack Kleinhenz said the improving employment situation, coupled with rising home and equity prices, have helped boost retail sales in spring.
The jobs market continued to show signs of recovery, as initial jobless claims fell more than expected in early June, the U.S. Department of Labor reported.
With retail sales increasing, small-to medium-sized businesses may need to increasingly turn to inventory financing for assistance to keep shelves stocked.
As product comes off the shelves, these companies will need to replenish, which can be difficult for a smaller retailer to do on their own. Retail inventory financing is available to help, as this form of asset-based lending allows a business to use current product as collateral to obtain a revolving line of credit.
The line of credit can than be used to purchase product to help ensure that shelves are never empty. This form of lending can also be beneficial in difficult times, as it allows retailers to operate at normal levels when cash flow may be lagging.