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US Retail Sales (M/M) Nov 0.3% (Est 0.8%; Prev 1.7%; prevR 1.8%) - After Three Strong Months, Some Giveback In November Retail Sales (Early Christmas Shopping?) - Y/Y Remains Very Healthy - Neil's Summary

Dec. 15, 2021 11:37 AM ET
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Cbus Neil's Blog
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US Retail Sales (M/M) Nov 0.3% (est 0.8%; prev 1.7%; prevR 1.8%)

Ex-Auto & Gas: +0.2% M/M vs. +0.8% consensus and +1.6% prior (revised from +1.4%)

marts_current.pdf (census.gov)

All changes m/m unless otherwise noted.

After three months of upside surprises, seasonally adjusted November retail sales (incl food services) came in below expectations increasing just +0.3% (expectations were for +0.8%) after October's very strong 1.8% increase on the headline (revised up from 1.7%). Ex-autos and gas (i.e., "core") sales also missed up just +0.2%. Expectations were for +0.8% and October was +1.6% (revised up from +1.4%). Headline sales are up 18.2% y/y, core up 16.5%. As Liz Ann Sonders notes, while the m/m missed with the very strong prior three months the y/y's actually increased.

So-called control group sales, which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations, and are considered by many to be a better measure of broader consumer spending trends, fell by -0.1% after rising 1.6% in October.

Usual caveats that all of this needs to be taken in the context of the massive increases in January and March which have us at an entirely new level of retail sales than pre-pandemic (see first chart above). Also, importantly given recent CPI prints, these are NOT adjusted for prices so that also should be taken into account (and also do not include many consumer purchases such as travel and some other services). Finally they are seasonally adjusted which can always cause distortions, particularly for retail sales which are very lumpy throughout the year.

And it does look like there might have been some pull forward of holiday orders to "beat the supply chain" as I indicated last month. Given seasonal adjustments, this would explain the big beat last month and miss this month. Some evidence of that might be seen in the fact that electronics/appliances were down -4.6%, department stores were down -5.4%, miscellaneous stores were -0.3% and internet (nonstore retailers) were flat. Also down were autos (-0.1%; we know the problems there) and health and personal care (-0.6% which have been weak for months). Sporting goods/hobby stores though did well +1.3% and clothing stores +0.5%. The rest of the gainers were not really "holiday shopping" stores (bars/restaurants +1.0%, gasoline stations +1.7%, grocery stores +1.3%, and building supply/landscaping +0.7%).

So definitely softening on the discretionary good side of things. I'm of the mind that it's the pull-forward and seasonal adjustments I noted above, but others might say we're finally starting to see the deteriorating spending intentions in the consumer confidence numbers put out by the UofM and other surveys starting to feed through. Or perhaps it's just some reversion to the mean that should be expected at some point given how amazingly far ahead of the pre-Covid trend many of those areas have run.

“We shouldn’t get too down about these figures,” ING’s James Knightley remarked. “The numbers for October were revised up a touch and we need to remember that retail sales are actually 21.6% higher than they were before the pandemic struck in February 2020,” adding that “in comparison with the performance of Europe this is a fantastic achievement.”

Here are some specifics (prior month in parenthesis) and the full table:

Gas stations +1.7% (+3.7%)

Sporting goods +1.3% (+0.7%)

Eat/drink +1% (+0.3%)

Bldg mat +0.7% (+2.5%)

Furniture 0% (+2.8%)

E-comm 0% (+4.1%)

Auto/parts -0.1% (+1.7%)

Health/pers care -0.6% (-1.4%)

Elec -4.6% (+3.1%)

Dept stores -5.4% (+2.5%)

To see more content, including summaries of most major U.S. economic reports and my morning and nightly updates go to Cbus Neil's Blog Posts for more recent or Sethi Associates for the full history.

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