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.

Consumers Tap Savings

Given anemic 2.3% wage growth from a year ago, consumers are heavily tapping savings for these purchases.

Mike "Mish" Shedlock

Comments
No. 1-12
Ambrose_Bierce
Ambrose_Bierce

The wealth effect, correlates to the stock market, if someone (Mish) would do that we might find that "this" instance of wealth effect is nothing compared to past events.

El_Tedo
El_Tedo

The bond vigilantes have capitulated to the belief that the Fed will intervene in any market sell off; stocks or bonds. Inflation is going to pop these bubbles, not deflation. Deflation fought the Fed & the Fed won.

truthseeker
truthseeker

and 10’s would both sell off but yields slowly dropped all day??

truthseeker
truthseeker

Mish were u not surprised when the bond market didn’t sell off with this news? I am really surprised you didn’t mention it. I thought the 30’s

MntGoat
MntGoat

great video...when a gal had style and grace