Consumers In Gear: Retail Sales Jump Far More Than Expected

Retail sales rose 0.8% in November topping consensus estimate of a 0.3% rise. There’s some talk of economic”overheating”

The Advance Retail Trade Report from the Census Department shows retail and food services sales for November 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $492.7 billion, an increase of 0.8% from October, and 5.8 percent above November 2016.

Gasoline Stations were up 12.2% from November 2016, while Building Materials and Garden Equipment and Supplies Dealers were up 10.7% from last year.

Motor vehicles and parts were down 0.2% from October but up 6.3% from a year ago.

Retail Sales Percent Changes

Consumer in Gear

The 0.8% gain in sales topped the Econoday consensus of 0.3%.

The consumer is in gear for the holidays as a very strong retail sales report lifts the outlook for fourth-quarter consumer spending. Retail sales surged 0.8 percent in November which is far beyond expectations and is 3 tenths over Econoday’s high estimate. The data include a strong upward revision to October which now stands at a 0.5 percent gain vs an initial increase of 0.2 percent.

November’s strength comes despite a 0.2 percent decline in auto sales excluding which sales rose a full 1.0 percent. Core readings underscore all the strength: up 0.8 percent for both ex-auto ex-gas and for the control group.

Most major components outside of autos show gains including a standout 2.5 percent jump in nonstore sales which speaks to unusual strength in e-commerce. Electronics & appliances appear to be early holiday favorites with these stores reporting a 2.1 percent jump on top of a 1.2 percent rise in October. Price discounting for apparel that was evident in yesterday’s consumer price report did not hold down totals for clothing stores which gained 0.7 percent for a second straight month. Restaurants also show strength, up 0.7 percent following October’s 0.4 percent rise.

Consumer spending proved a little soft in the third-quarter GDP report at only 2.3 percent annualized growth but today’s report, including the revision, is certain to lift the outlook for fourth-quarter GDP. And it may even encourage talk that the economy, fed by unusual strength in the labor market, could be at the risk of overheating.