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Retail Sales Stronger Than Expected, But Still Show Moderation From Q3


October's advance retail sales were stronger than expected, particularly when taking into account upward revisions to September's data.

  • Overall retail sales declined -0.1% M/M (vs -0.3% expected, +0.9% prior revised from +0.7%), with ex-auto +0.1% (vs -0.2% expected, +0.8% prior revised from 0.6%) and ex-auto/gas +0.1% (vs +0.2% expected, +0.8% prior revised from 0.6%). And the key control group, an input into GDP, was in line at +0.2% M/M but saw prior revised up to 0.7% from 0.6%.
  • As expected, motor vehicle retailers (-1.0% M/M after +1.1%) and gasoline stations (-0.3% M/M after +1.0%) dragged on overall sales, though the gas sales decline may have been a little less than expected given the sharp drop in prices.
  • Elsewhere the story was mixed. Multiple categories saw improvement vs September: electronics (+0.6% vs +0.4% prior), food/beverage (+0.6% after +0.2%), health/personal stores (+1.1% after +0.5%), and clothing (flat after -0.8%)
  • However several saw flat/lower growth. Building materials saw a second consecutive -0.3% M/M reading, with sporting goods contracting -0.8% after +0.1%, furniture -2.0% after -0.6%, general merchandise -0.2% after +0.4%, miscellaneous retailers -1.7% after +4.8%, nonstore retailers +0.2% after +1.4%, and food services +0.3% from +1.6%.
  • In real terms, the 0.0% CPI figure for October implies a modestly negative "real" figure. On a Y/Y basis, CPI-adjusted retail sales were slightly negative (-0.7%) for the 11th month in 12, and remains below late-2021 levels.
  • While the underlying details were very mixed, the overall pullback was less than expected, and with the control group reading in-line, this report shows a moderation from a very strong Q3 but hardly a collapse of consumption as we head into the holiday shopping season.

Source: BLS, Census Bureau, BBG, MNI

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