Sales at Costco Wholesale Corp. stores rose and some items were in short supply as shoppers stocked up on bulk quantities of everyday goods amid the new coronavirus outbreak. February comparable sales jumped 12.1% as chain scrambles to restock shelves; “It’s been nuts,” Costco CFO Richard A. Galanti said on a Thursday earnings call with investors.
The urge to stock up has inspired its own Twitter hashtag, #CostcoPanicBuying. Pallets of toilet paper selling out in under two hours. Lines are wrapped around buildings and snaked through jampacked parking lots — just to get in the door. Shelves are stripped bare of bottled water and bagged rice. Approximately 200 people lined up outside a Honolulu Costco on Saturday, while shoppers at a Seattle store reported wait times of more than an hour at checkout.
U.S. factory manufacturing activity slowed in February as new orders contracted, reflecting worries about supply chain disruptions related to the fast-spreading coronavirus outbreak, which has revived financial market fears of a recession.
The Institute for Supply Management (ISM) said its index of national factory activity fell to a reading of 50.1 last month from 50.9 in January. Economists polled by Reuters had forecast the index would slip to 50.5 in February. A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. economy. The ISM index pulled above the 50 threshold in January for the first time in five months, as trade tensions between the United States and China eased following the signing of a partial deal that month.
Specifically, manufacturers of computer and electronic products said the “coronavirus is wreaking havoc on the electronics industry,” adding “it’s a mad dash to dual source stateside in case China isn’t back online soon.” Chemical products manufacturers said the coronavirus and Boeing’s decision to suspend production of its troubled 737 MAX airplane had “suppressed new orders.” And manufacturers of food, beverage and tobacco products also warned of weaker demand for goods made in China as well as “significant delays to production,” because of supply bottle necks.
The drop in demand resulting from the factory slowdown in China will cost ocean shipping companies a combined $1.9 billion, according to the most recent estimate from Sea-Intelligence.
Of the 111 blank sailings on the Transpacific route, 48 cite the COVID-19 outbreak while the remainder are normal seasonal cancellations following Chinese Lunar New Year. There are 75 blank sailings on the Asia-Europe route — 29 blaming the outbreak, according to Sea-Intelligence and reporters at Supply Chain Dive.
A new doorstep drop-off service from Instacart got an early launch Thursday, thanks to demand created by fear of coronavirus. The "Leave at My Door" delivery option is now available to all Instacart customers, and the company says it has seen sales in the past week as much as 20 times higher in California and Washington state.
Demand for hand sanitizers, canned foods and face masks were among the items most in demand. Consumers have been stockpiling essentials in some states, spurred by messages from state health departments urging residents to buy supplies of non-perishable foods, prescription medications and sanitary supplies. Ironically, Target Corp said on Tuesday it was seeing a surge in store foot traffic in the United States due to the outbreak.
In some better news...U.S. lobster prices have plummeted to the lowest in at least four years after the spread of the coronavirus halted charter flights to Asia at a time when sales usually boom for Chinese New Year celebrations. The fallout has left thousands of pounds of unsold lobster flooding North American markets.
Prices for New England halves — a whole lobster weighing 1.5 pounds — have tumbled 17% since January 20 and are currently at $8.10, the lowest for the period since at least 2016. They typically rise this time of year as supplies are tighter before the main fishing season begins. Last year, they cost $10.70, with the 10-year-average at $9.85.
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