October retail sales show slow growth in October, reports Commerce and NRF

While it would be a stretch to describe the current pace of retail sales growth as torrid, data issued today by the United States Department of Commerce and the National Retail Federation (NRF) pointed to growth levels that have been in line with recent months.

Commerce reported that October retail sales at $447.3 billion were up 0.1 percent compared to October and up 1.7 percent annually, following annual gains of 0.1 percent and 0.2 percent in September and August, respectively.

Total retail sales from August through October were up 2.0 percent compared to the same period in 2014.

The NRF reported that October retail sales, which exclude automobiles, gas stations, and restaurants, were up 3.1 percent annually and up 0.3 percent on a seasonally adjusted basis compared to September.

NRF Chief Economist Jack Kleinhenz wrote in a blog posting that deflationary pressures, unseasonably warm weather, strong annual comparisons and a shift toward spending on services are among reasons that October’s retail sales data is “muted,” while adding that October fell outside NRF’s expectations for the holiday season, with the organization optimistic that holiday sales growth will be solid.

“The uptick that is expected to come from recent job and wage improvements has yet to register in terms of our expected economic and spending growth,” he noted. “As some retailers have already reported, overall third quarter growth left a lot to be desired, however, the picture is improving and consumers should start to spend more freely throughout the holiday season.”

Last month, the NRF said it expects holiday sales—which it defines as sales in the months of November and December and exclude autos, gas, and restaurant sales—to see a 3.7 percent annual gain to $630.5 billion, which comfortably outpaces the ten-year average of 2.5 percent. What’s more, 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.

IHS Global Insight Director of Consumer Economics Chris Christopher commented in a research note that consumers came out a bit in October after taking a breather in September, while explaining that IHS expects November to perform significantly better than October, since many shoppers were waiting for the deep and heavy price discounting and promotions that occur in early November.

“We are forecasting holiday retail sales to rise 3.5% above last year; not as strong as last year’s growth, but a solid showing,” said Christopher. “This holiday retail sales season is looking rather good since consumer price inflation is modest, confidence is making a comeback, the stock market has stabilized, and pump prices are falling.”