US retail sales solid in November

The modest 0.2% m/m gain in headline sales in November was partly due to a price-related drop in gasoline station sales and a slight dip in the value of motor vehicle sales, which remain close to a decade high. In contrast, excluding gas, autos and building materials, so-called control group retail sales grew by a very encouraging 0.6% m/m, suggesting that real consumption growth will be around 2.5% annualised in the fourth quarter.

The slightly weaker than expected headline figure was dragged down by a 0.8% m/m decline in gasoline station sales. Furthermore, motor vehicle sales were down 0.4% m/m even though manufacturers' unit sales were broadly flat last month, which suggests that lower prices were at play there as well.

Control group retail sales grew by a very healthy 0.6% m/m in November, beating expectations of a 0.4% m/m gain. Electronics sales rose by 0.6%m/m, which presumably reflects decent Black Friday and Cyber Monday sales.  Furthermore, clothing sales rebounded by 0.8% m/m last month, more than reversing a 0.5% m/m decline in October. It was unseasonably warm in October, resulting in some fall clothing purchases being pushed back into November.

"The November retail sales report reaffirms our view that real consumption will be around 2.5% annualized in the fourth quarter. More importantly, it dismisses any concerns of a potential slump in household spending after a couple of weaker months in August and September. Not that there is much doubt any more, but this supports the case for a rate hike by the Fed next week", says Capital Economics in a research note.