Summary: US retail sales increase for sixth consecutive month; rise less than expected figure; increase “disappointing” given time of year; Dec quarter sales likely to be “distorted” by rising COVID cases, restrictions, lack of fiscal package; results across the various retail categories were patchy; “non-store retailers” the largest influence on total.
US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0% by the end of that year. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery has since taken place.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 0.3% in October. The gain was lower than the 0.5% increase which had been generally expected and considerably less than the 1.6% rise after revisions in September. On an annual basis, the growth rate slipped from September’s revised rate of 5.9% to 5.7%.
“The pullback to the slowest pace of growth in six months is disappointing, especially in the run up to the holiday/festive season,” said senior economist Elliot Clarke.
The report was released on the same day as October industrial output figures and longer-term US Treasury bond yields fell moderately. By the end of the day, the 10-year Treasury yield had lost 4bps to 0.86% while the 30-year yield finished 6bps lower at 1.61%. The 2-year yield remained unchanged at 0.18%.
Clarke said December quarter sales would likely “be distorted” as rising COVID cases, continued government restrictions and a lack of renewed fiscal packages hinder spending.
Results across the various retail categories were patchy, with sales in a majority of segments falling over the month. The “Non-store retailers” segment provided the largest influence on the overall result. Sales in this segment increased by 3.1% over the month and by 29.1% on an annual basis.