U.S. retail sales miss expectations in November, consumption to grow lower in Q4

U.S. retail sales report for November was disappointing, coming below consensus expectations. It rose just 0.1 percent in sequential terms, as compared with the market forecast of a rise of 0.3 percent. Moreover, October’s print was downwardly revised to a growth of 0.6 percent from the initial result of a gain of 0.8 percent.

The headline report was weighed on by sales at motor vehicle and parts dealers, which dropped 0.5 percent, corroborating the decline witnessed in unit sales recorded earlier this month, with the ex. auto sales rising 0.2 percent on  the month, noted TD Economics. Meanwhile, gasoline station sales grew 0.3 percent giving some support to the overall figure. Excluding autos and gas, core retail sales rose 0.2 percent sequentially, lower than the consensus expectations of 0.4 percent.

Excluding autos, gas, building materials and food services, the ‘control group’ rose just 0.1 percent sequentially. Sporting goods and miscellaneous dragged down sales in the control group while the rest of the main categories recorded increases.

The retail sales report a tad stain on an otherwise strong series of U.S. economic data that has been coming in above expectations for many weeks now. Along with the downward revisions to October’s sales report, the weak headline figure implies that consumers are yet to fully open up their wallets in spite of job and income gains, according to TD Economics.

However, the details of the report are more encouraging. In spite of certain downward revisions, the slowdown seen in November report follows two solid months of gains. Some of the pullback in November was in nominal auto sales that is probably related to price pressures stemming from the appreciating dollar, whereas the fall in sporting goods sales might have been due to the warmer than usual weather.

Spending in these categories are expected to recover in December, with  the overall consumer well positions to push economic growth next year on the back on better job prospects and increasing wages, stated TD Economics. The November report implies that consumption in the fourth quarter rose slightly below anticipated earlier.