November retail sales data from Commerce and NRF bodes well for strong holiday activity

Retail sales data for the month of November showed both sequential and 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 at $449.3 billion were up 0.7 percent compared to October and up 5.1 percent compared to November 2013, and total retail sales from September through November are up 4.7 percent annually.

The NRF said that November retail sales, which exclude automobiles, gas stations, and restaurants, were up 0.6 percent seasonally-adjusted month-to-month over October and increased 3.2 percent annually on an unadjusted basis. NRF officials said that November’s gains “were consistent” with its 4.1 percent growth forecast for holiday retail sales, which it defines as the months of November and December, to $616.9 billion, which is above the actual 3.1 percent for 2013.

The NRF said that holiday sales have grown by an average of 2.9 percent over the last ten years, which includes its 2014 projection, and are pegged to account for 19.2 percent of the retail sector’s $3.2 trillion in 2014 annual sales, and if the 4.1 percent 2014 annual increase is reached, it would mark the first time holiday sales have headed up more than 4 percent annually since 2011.

But even with NRF noting that November retail sales trended in the right direction, data issued in preliminary survey results by the NRF in a December 1 New York Times report found that retail sales in stores and online from Thanksgiving through the end of the following weekend were down 11 percent annually compared to the same time a year ago from $57.4 billion to $50.9 billion.

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.

“Increasing wages combined with lower gas prices are providing retailers with an early holiday present this year,” NRF Chief Economist Jack Kleinhenz said in a statement. “Every economic indicator is pointing toward a strong holiday season. Healthy November sales should provide momentum for an even stronger December as customers continue to seek out deals all the way to Christmas.”

Supply chain stakeholders describe the current market environment as it relates to retail supply chains as steady for the most part. With the impact of the harsh winter weather in the background, shippers were active in rebuilding inventories in advance of Peak Season, especially with ongoing congestion issues at West Coast ports still an issue.

IHS Global Insight Director, U.S. Consumer Economics Chris G. Christopher, Jr. was bullish about the retail sales data in a research report.

“Shoppers came back to life in October and November after a pretty poor showing in September,” he wrote. “Elevated levels of consumer confidence, lower gasoline prices, better job prospects, and heavy retail price discounting are supporting relatively strong consumer spending in the fourth quarter. Discretionary spending improved significantly in November sending a clear signal that this holiday retail season is looking brighter than last year. Looking ahead, we expect real consumer spending growth in 2015 to outpace 2014 due to lower gasoline prices, stronger real disposable income growth, and elevated levels of consumer confidence.”

And Christopher’s corporate colleague Chuck Clowdis, managing Driector - Transportation IHS Economics & Country Risk, said he maintains that expectations for Thanksgiving, Black Friday, and Cyber Monday are a bit higher than what was truly expected.

“However, exuberance that we are indeed putting together rising numbers, albeit,  still ‘smallish’ by robust recovery standards, perseveres,” he said. “We are still chugging along and will continue to demonstrate that the consumer is feeling better. People are finding jobs, perhaps not ones they truly wish, but employment nonetheless. Confidence builds as paychecks arrive. AND, lower gasoline prices are like a pay raise to most Americans.”