As we enter the 2nd week of earnings season having witnessed the 1st week of earnings season provide a relatively small boost to the major indices, I can’t help but to wonder what we will hear coming from the retail sector in the next couple of weeks. Retailers, by and large, won’t begin reporting their Q3 2017 results until early November and as the Thanksgiving Day holiday shopping season kicks into gear. As the Halloween period ends on October 31st, the real shopping begins with millions of Americans hitting their favorite shopping destinations, ramping up spending for Thanksgiving dinners and the all-important Christmas and Hanukah gift-giving seasons. It’s in this spirit of retail spending that this article aims to update investors and traders on the most recent and trending retail sales data.

On Friday 13th, how fitting, the U.S. Commerce Department reported that September retail sales rose 1.6% against economists’ expectations of a 1.7% rise in retail sales for the month. While this was a slight miss against expectations, it marked the largest rise in monthly retail sales in nearly 2 ½ years. The retail sales data for August was also revised to show sales slipping 0.1% instead of the previously reported 0.2% drop. Retail sales increased 4.4 percent on an annual basis. Economists polled by Reuters had forecast retail sales jumping 1.7 percent in September.

Hurricane’s Irma and Harvey played a large role in the September retail sales figures. The impact shows up mightily in the different categories for which make up the retail sales data.

Sales at gardening and building material stores increased 2.1 percent last month, the biggest increase since February, and followed a 0.6 percent rise in August. Receipts at auto dealerships soared 3.6 percent likely as residents replaced flood-damaged motor vehicles. That was the largest rise since March 2015 and followed a 2.1 percent decline in August. Retail sales were also lifted by a 5.8 percent surge in receipts at service stations. The increase was the largest since February 2013 and followed a 4.1 percent gain in August. 

If we strip out automobiles, gasoline, building materials and food services, retail sales increased a scant 0.4% last month after being unchanged in August. These retail sales correspond most closely with the consumer-spending component of gross domestic product. The rebound in core retail sales from August to September also suggests the drag on the economy from the hurricanes will be very modest, but detract nearly .5% from total GDP. Below is a table of the individual categories that make up the total, monthly retail sales data:

As it pertains to the chart and correlates to investor decision making, the most glaring aspect continues to be the contracting Department Store retail sales and the growth in Non-store/e-commerce retail sales. During the month of September, Department Store sales fell .4% from August and .5% year-over-year. As a complete offset and in stark contrast, Non-store sales rose in September .5% from August and 9.2% year-over-year. Another sore spot reported in the September retail sales report came from Sporting goods, which fell .2% since August and 5.5% year-over-year. 

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