November retail sales show holiday season gains

As the holiday shopping season began in earnest in November, retail sales for the month showed both sequential and annual gains, according to data released today by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that November retail sales at $448.1 billion were up 0.2 percent compared to November-for its best showing since July-and up 1.4 percent annually, on the heels of 1.7 percent, 0.1 percent, and 0.2 percent, in October, September, and August, respectively.

Total retail sales from September through November were up 1.7 percent compared to the same period in 2014.

And the NRF reported that November retail sales, which exclude automobiles, gas stations, and restaurants, were up 3.0 percent annually on an unadjusted basis and up 0.5 percent on a seasonally-adjusted basis compared to October.

In October, the NRF said that 2015 holiday sales will account for roughly 19 percent of the $3.2 trillion in total 2015 annual retail sales, with holiday season online sales expected to see an annual jump between 6-to-8 percent and head up to as much as $105 billion.

Should this holiday season projection hold, it would be in good company with 2014, which saw a 4.1 percent annual increase in holiday sales.

“Consumers right now are getting great value for significantly less this holiday season, given the deflationary environment that continues impact overall trends in spending,” said NRF Chief Economist Jack Kleinhenz in a blog posting. “Additionally, the broadening of the holiday season, warmer than normal weather patterns and a shift in spending toward services remain the top challenge for retailers right now.”

Kleinhenz added that that retail sales growth in November points to a healthy consumer that is helping retailers see solid growth amid economic and environmental challenges.

This holiday sales growth is occurring concurrently with still-high inventory levels that continue to weigh on retailers and could lead to heavy discounts and sales upon completion of the holiday shopping season.

But NRF Vice President, Supply Chain Jonathan Gold said in the Global Port Tracker Report issued by NRF and Hackett Associates that retailers went into the season with strong inventories that ensured consumers would have a good depth and breadth of selection, and that should hold true for the remainder of the season.

IHS Global Insight Director of Consumer Economics Chris Christopher observed in a research note that a retail trade inventory build in the third quarter and especially in September placed pressure on many retailers to speed up holiday pricing discounting this year in order to eliminate excess inventory.

“Consumers took it easy in October and then came back with a vengeance in November,” he noted. “We expect retail inventories to take a hit in November since today’s report was especially strong in most retail categories. We are forecasting holiday retail sales to rise 3.4% above last year; not as strong as last year’s growth [of 4.1%], but a solid showing. This holiday retail sales season is looking rather promising since consumer price inflation is modest, confidence is making a comeback, the stock market has stabilized, pump prices are falling, and job opportunities are looking brighter.”