A robust end-of-summer tourism season and high consumer demand for building supplies, food and other goods boosted all of Maine’s business sectors except for utilities in August to reach higher levels than before the pandemic, but that rise may not last.
Supply and workforce shortages and the delta coronavirus variant are putting a damper on taxable sales growth, which appears to be slowing as the fall progresses, Kirsten Figueroa, commissioner of the Maine Department of Administrative and Financial Services, said in her most recent sales and revenue report to the governor.
Taxable sales in August, which are an indicator of business strength, topped pre-pandemic levels, with lodging and restaurants both continuing to recover over the summer after being particularly hard-hit by closures and restrictions early in the pandemic. The supply and worker shortages caused some businesses to continue curtailing hours even though demand from people wanting to eat out and travel continued to be strong.
“The enthusiasm for Maine made it difficult for the hospitality community to keep up with demands regarding staffing,” said Matthew Lewis, president and CEO of the industry group HospitalityMaine. “Almost all of our hotel and restaurant members had significantly lower staff for the summer rush than they had in previous years.”
He said housing, transportation and child care challenges, as well as competition for workers from other industries, will need to be resolved to “ease the summer grind in the years to come.”
Still, overall taxable sales from August 2019 until this August were up almost 20 percent to about $3.2 billion, a sign that Maine’s economy saw robust demand, consumer spending and a rebound in most business sectors, according to the most recent Maine Revenue Services data.
Taxable sales in lodging rose to $302.5 million this year, 50 percent higher than in August 2020, and up almost 18 percent from August 2019, before the pandemic depressed sales.
Restaurant sales, which rose to $387.9 million in August, also were up over pre-pandemic 2019 levels, but only by 1.7 percent.
Both lodging businesses and restaurants saw declines of more than 20 percent between August 2019 and August 2020, when the economy was just beginning to reopen from pandemic shutdowns.
Building supply sales, which got a boost from new construction and pandemic-fueled home upgrades, rose almost 30 percent over the two years to $343.9 million in August. Taxable sales of cars also rose almost 20 percent over the two years despite shortages of new and used vehicles and the semiconductors used in their manufacture.
Retail sales — other than food and general merchandise sold in large department and discount stores — were up the most over the past two years, rising almost 65 percent to $506.5 million. General merchandise sales were up 9.4 percent over the two years. They rose 18.3 percent from August 2020 to this August, to $384.4 million.
The higher August numbers than in 2019 “are a great confirmation of the pent-up demand for goods, services and tourism,” said Curtis Picard, president and CEO of the Retail Association of Maine.
He expects the holiday shopping season to be strong this year, with the National Retail Federation predicting an annual sales increase across the country of up to 10.5 percent, to $859 billion. Retailers are urging consumers to shop earlier because of anticipated shortages.
“We are hopeful that the retail sector continues to grow and expand, but we are cautiously watching how the pandemic, workforce shortages and supply chain disruptions impact the holiday season,” Picard said.
Figueroa said economists are reducing their expectations for U.S. economic growth during the second half of the year. She said there is additional uncertainty surrounding congressional action on raising the debt ceiling in December and on the president’s infrastructure and reconciliation packages.
“If these issues can be resolved with limited damage to the economy, there’s the potential for stronger growth in 2022,” she said.