November retail sales see modest sequential gains and stronger annual increase

Retail sales for the month of November saw modest sequential gains over October and larger annual gains, according to data issued by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that November retail sales were up 0.1 percent over October, following a 0.6 percent (revised from 0.8 percent) increase from September to October, at $465.5 billion. Total retail sales from September to November saw a 3.7 percent annual gain. Retail trade sales saw a 3.6 percent annual gain and were basically flat from October to November. And nonstore retailers were up 11.9 percent annually, likely due to increased e-commerce activity.

The NRF reported that retail sales, excluding automobiles, gas stations, and restaurants, were up 0.1 percent from October to November, following an increase of 0.9 percent from September to October, and were up 5 percent compared to November 2015. And online and other non-store sales saw an impressive 15.3 percent annual increase, a gain NRF said was buoyed by e-commerce.

“Consumers were able to take advantage of low prices throughout the first half of the holiday season, checking out with full baskets but paying less even though purchasing was up,” NRF Chief Economist Jack Kleinhenz said in a statement. “The combination of job and wage gains led to solid holiday spending by American households. Consumers have the wherewithal to spend but households remain measured and rational, which is no surprise given their history since the recovery began in 2009.”

The NRF said that November’s tally indicates that holiday season retail sales, which are defined by the NRF as the months of November and December, will meet its holiday sales forecast of a 3.6 percent annual gain to $655.8 million. This would represent a heady increased compared to the 10-year average of 2.5 percent and is also above the seven-year average of 3.4 percent, going back to the beginning of the economic recovery in 2009.

While the NRF’s holiday sales forecast is promising it is actually slightly off from 2015’s and 2014’s 3.7 percent and 4.1 percent forecasts, respectively. The 2015 holiday shopping season ended up seeing a 3.0 percent annual increase.

The NRF’s holiday sales forecast, according to the organization, is based on an economic model that uses several different types of indicators, including consumer credit, disposable personal income, and previous monthly sales releases.

As expected, e-commerce is again expected to play a large role in holiday shopping, with the NRF saying it expects online sales to head up between 7 and 10 percent annually to as much as $117 billion, which is 10.3 percent higher than last year’s online holiday sales projection.

Despite the gains in November retail sales Stifel Fixed Income Chief Economist Lindsey Piegza said that sales came in less than what was expected, which was closer to a 0.3 percent increase, adding that year-to-date through November, retail sales are up 3.8 percent annually, down from a 4.2 percent clip reported at the beginning of the fourth quarter.

“Consumers remain modest in their spending habits as we head into the final weeks of the year,” Piegza wrote. “For retailers, the holiday shopping season is key for growth, however, this year, like last year and the year before that, consumers are looking for deep discounts and price cuts. As we saw on Black Friday, more shoppers are out this season compared to 2015, but they are increasingly hunting for bargains and spending less per person.”