November 17, 2020 | 08:56
U.S. Retailers ... Sensing Some Fatigue
Not exactly a "Monster" of a report, unlike the single that will be dropped this Friday, but it has been six months since the recovery began so some slowing is completely expected. U.S. retail sales rose 0.3% in October, below expected but still the sixth straight monthly gain and 5.7% above year-ago levels. There were revisions that were, on net, higher: September's 1.9% increase was shaved to +1.6%, but August's 0.6% increase was jumpstarted to reflect a 1.4% gain.
However, momentum has slowed. And October's move was, frankly, disappointing. Many of the areas that benefitted from the reopening of the economy, the need for retail therapy, are seeing those benefits fizzle out somewhat. Purchases of new cars and SUVs continued to rise, albeit at a slower pace (+0.4%). Excluding autos, total sales edged up 0.2%, the slowest rise since April. And, when the move to WFH began, there was a huge need to make one's humble abode more comfortable, but there are only so many new sofas one can buy, or desks. Furniture sales fell for the first time since earlier this year (-0.4%). Clothing and accessories were also down for the first time since the shutdown. Ditto for sporting goods. And, the one area which had benefitted from the desire to go out for a meal is seeing the early effects from the spreading virus.... food services & drinking places, otherwise known as restaurants and bars, saw sales slip 0.1% in October. And, deeper declines are expected come November as more restrictions are enacted around the country.
Overall, not an encouraging report but not a shock that consumers needed a breather after a lengthy streak of spending and as savings and some UI benefits start to thin out a bit. This all goes back to the need for continued job growth and steady income gains to support consumer spending. The November report will be more telling about the mood of American consumers, and if they are able to make up for a tough year by creating a more merry holiday season.