Puerto Rico Economic Sector Profiles
Size and importance of sector
The trade sector, the main outlet for private consumption, with over $40.0 billion in annual sales, represents about 8% of the island’s GDP. It accounts for 21% of private nonfarm employment.
During 2012, employment in the wholesale and retail trade sectors continued to decline, as the economy still does not recuperate from the current recession. It fell from 158,680 jobs in 2010, to 147,530. Compared to last year (up to October), it declined 5.8% translating into a loss of 9,040 jobs.
Although both sectors have lost jobs, the reduction has been more pronounced in the retail sector, 7.1% year-to-year, accounting for 97% of the total losses in both sectors. Within retail, the biggest losses in jobs have been in supermarkets and grocery stores. This sector saw a decline of 11.3% in employment this year. On the other hand, employment in food services and drinking places has increased, 1.9% or 1,060 jobs more from last year.
Since last year retail sales (at nominal prices and seasonally adjusted) have been increasing (up to August), from $23.4.0 billion in 2011, to $23.9 billion in 2012. That’s an increase of $515,2 million, at an annual rate of 2.2%, slightly lower than the 2.5% growth in 2011.
By type of sales or establishments, during the period of January - August 2012, department stores accounted for 17.6% of the total sales in the period, followed by food stores (14.8%), and drugstores (11.4%), a distribution that has remained fairly consistent for the past four years.
Even though it accounts for 10.1% of total sales, those of motor vehicles registered the biggest increase of all sectors, 24.4%, as in 2011. Sales of cafeterias and restaurants, where the food and drinking establishments are, and registered an increase in employment, rose by 1.9%, saw an increase in sales of 3.1% year-to-year, meaning that more consumers were eating out. On the other hand, sales of food stores fell by 2.2%, which is not surprising as consumers are buying more food and groceries from non-food retailers, and as mentioned before eating out a little more.
Adjusted by inflation, retail sales increased 0.9% in the first eight months of the year, after declining 0.2% in the same period of 2011. Since August of last year the trend in real sales is on the upside, pointing to a certain expansion in consumer spending but, and this is important, led mostly by sales of motor vehicles and gasoline.
Continuing losses in jobs notwithstanding, judging by the moderate upward trend in retail sales, and an expected much more favorable holiday season shopping, at least for the balance of the year the outlook is favorable. Now, a new government enters Puerto Rico in January 2013. This development, plus the recent deepening of the fiscal crisis of the government (see the Government section), will undoubtly exercise an element of caution on consumer’s confidence, which could dampen any expectations of increases in spending.
1. Jaime Santiago. “It’s beginning to look a lot like Christmas,” Caribbean Business (Thursday, November 22, 2012), pp. 14-19.