Nation Retail Federation issues promising report on consumer spending

With four straight months of sales gains under their belts and with the holiday season fast approaching, retailers have reason for optimism as consumer spending finally shows momentum.

According to the National Retail Federation, October retail industry sales (which exclude automobiles, gas stations, and restaurants) increased 0.3 percent seasonally adjusted over September and 2.6 percent unadjusted over last year.

“This continued momentum is good news for the industry, especially with Black Friday and Cyber Monday quickly approaching,” said NRF President and CEO Matthew Shay. “While there is no question that consumer demand has improved, there are still questions about consumer confidence tied to high unemployment. We need to see improvement in key economic indicators to sustain any long-term growth.”

October retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 1.2 percent seasonally adjusted over September and 5.4 percent unadjusted year-over-year.

“While spending throughout the industry was varied, it appears the fourth quarter has gotten off to a solid start,” said NRF Chief Economist Jack Kleinhenz. “October’s results are a clear indicator that the economy and consumer spending continue to show marked improvement, even though we expect consumers to proceed with caution.”
This cautionary note was also sounded by Chris G. Christopher, Jr. Senior Principal Economist, U.S. Macroeconomics with IHS Global Insight.

“Or worst case scenario is a ‘double-dip,’” he said. “And we don’t see that happening. But even our best case scenario hardly makes consumers want to break out the champagne. It will be a very soft recovery at best.”

According to the NRF, cooler, seasonal weather in October helped apparel and sporting goods stores’ sales.  Clothing and clothing accessory stores sales increased 0.7 percent seasonally adjusted over last month and 1.4 percent unadjusted over last year. Sales at sporting goods, hobby, book and music stores increased 1.0 percent seasonally adjusted month-to-month and 5.9 percent unadjusted year-over-year.

Building material and garden equipment and supplies dealers sales also showed solid growth, increasing 1.9 percent seasonally adjusted month-to-month and 7.3 percent unadjusted over last year. Health and personal care stores sales decreased 0.1 percent seasonally adjusted from September but increased 1.6 percent unadjusted year-over-year.