Consumers in Gear: Retail Sales Jump Far More Than Expected
Mike Mish Shedlock
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.
Consumers Tap Savings
Given anemic 2.3% wage growth from a year ago, consumers are heavily tapping savings for these purchases.
Mike "Mish" Shedlock