Retail sales surged in November, giving more credence to the strong consumer confidence numbers. Retail sales surged 0.8 percent after an upward revision, from 0.2 percent to 0.5 percent in October.
Gasoline Sales Helped but Overall Retail Sales Were Strong
With the 0.8 percent increase in retail and food services sales in November, plus the upwardly revised October number, from 0.2 percent to 0.5 percent, the last quarter of the year is shaping up to be all that we had envisioned: this holiday season will be a merry one. Furthermore, the strength in retail sales gives credence to the strong increase we have seen for consumer confidence during the past year. That is, the U.S. consumer was highly upbeat going into the last quarter of the year.
The only negative reading for retail sales in November was motor vehicle & parts dealers’ sales, which declined 0.2 percent. This was expected as the increase in automobile sales that followed hurricanes Harvey and Irma as people replaced hurricane damaged cars faded away.
It is true that gasoline station sales were up considerably, 2.8 percent, likely due to the recent increase in gasoline prices. However, sales at furniture & home stores were up a strong 1.2 percent while purchases at electronics & appliance stores were up a strong 2.1 percent. Meanwhile, sales from nonstore retailers surged 2.5 percent, which shows the continuous improvement of online retailers and their advance over the more traditional retail sales distribution channels. Furthermore, sales at building material & garden equipment & supplies dealers were also up a strong 1.2 percent, perhaps as a consequence of the rebuilding after the hurricanes, while sales at sporting goods, hobby, book & music stores were up 0.9 percent.
Clothing & clothing accessories stores’ sales were up 0.7 percent while health & personal care stores’ sales were up 0.4 percent. Meanwhile, sales at food & beverage stores inched up 0.2 percent while general merchandise stores’ sales were flat. However, within this sector, sales at department stores, which is one of the weakest sectors of retail, managed to increase 0.3 percent during the month.
Rounding out the report, food services & drinking places’ sales, which represent the service side of the retail report, increased a strong 0.7 percent. This sector had been slowing down for some time.
Strong Control Group Sales Good News for PCE and GDP
Perhaps the most market-changing release in November was the very strong control group sales print. Control sales, which are retail sales less food services, gas, automobiles and building materials, and used for the calculation of GDP, surged 0.8 percent in the month. Furthermore, October control group sales were also upwardly revised, from 0.3 percent to 0.4 percent. This means that we should expect another strong performance by the U.S. consumer during the last quarter of the year. The biggest question would probably be: where are consumers getting the money for this strong consumer performance with income growth remaining low?
