- Retail sales rose 0.2% in November, disappointing expectations for a 0.5% increase. On the plus side, October was revised up to 0.4% (from 0.3% in advance estimate).
- Sales in the retail sales “control group,” which excludes more volatile components (gas, autos, building materials and food services) came in at a soft 0.1% (median forecast was for 0.3%).
- Autos & parts dealers had a good month, rising 0.5%, following an upwardly revised 1% gain in October. Gas stations also rose soundly (up 0.7%). These gains were tempered by declines in several categories including health and personal care (-1.1%), clothing (-0.6%), department stores (-0.6%), and sporting goods (-0.5%), among others.
- As they have for some time, non-store retailers continued to outperform bricks and mortar, rising by 0.8% on the month. Non-store retailers now make up 12.9% of overall retail sales, up almost a percentage point from a year ago.
Key Implications
- Retail sales growth slowed in November, but not enough to put the fourth quarter’s consumer spending profile at risk. Spending on services has been buoyant and should continue to give support to growth. Overall, we expect personal consumption expenditure to grow by between 2% and 2.5% annualized in Q4, enough for real GDP growth close to come in close to the 2% mark.
- A China-U.S. trade deal that avoids tariffs on consumer goods should come as a welcome relief to U.S. retailers. This should allow still-strong consumer fundamentals – healthy job and income growth and easy financial conditions – to continue to drive healthy spending over the next year.
