Retail sales remain on solid path in November, reports Commerce and NRF

Even with mixed sequential and annual tallies, retail sales data, for the month of November, which were respectively issued today by the United States Department of Commerce and the National Retail Federation (NRF) pointed to the groundwork for solid holiday shopping season activity.

Commerce reported that November retail sales—at $546.5 billion—were down 1.1% compared to October and were up 4.1% annually. And it added that total retail sales, from September through November, saw a 5.2% increase compared to the same period a year ago, marking the sixth straight monthly annual gain.

Looking at some specific sectors, Commerce said that retail trade sales slipped 0.8% from October to November and up 7.1% annually, with non-store retailers, which includes the ongoing COVID-19-driven surge in e-commerce, rose 17.2% annually, whereas the negatively pandemic-impacted food services and drinking places segment decreased 17.2%.

NRF officials said November’s retail sales activity set the stage for a healthy holiday shopping season annually in light of the pandemic.

And they noted that its retail sales calculation, which excludes automobile dealers, gasoline stations and restaurants to focus on core retail, showed that November was off 0.3% on a seasonally-adjusted basis compared to November, while increasing 8.8% on an unadjusted basis annually. In October, NRF’s data pointed to a 0.1 percent month-over-month and an increase of 10.5 percent year-over-year, as well as a 10.8% unadjusted year-over-year gain on a three-month moving average.

NRF added that on an annual basis, retail sales have seen gains each month since May under NRF’s calculation and since June under the Census Bureau calculation, noting that retail sales during the first 11 months of the year were up 6.6 percent, according to the organization’s calculation.

“The month-over-month decline isn’t surprising because some spending was pulled forward into October by campaigns encouraging consumers to shop early and shop safe,” NRF Chief Economist Jack Kleinhenz said in a statement. “Despite that, as we go into the final weeks of 2020, year-over-year trends show spending is holding up well regardless of month-to-month fluctuations. Nonetheless, we have to remember the remainder of the holiday season depends critically on the virus. We are optimistic, but spending could shift into a lower gear if the virus continues to spread.”

Key retail sectors during November include from the NRF included:

-Grocery and beverage stores were up 1.6% month-over-month seasonally adjusted and up 8.5% unadjusted year-over-year;
-Building materials and garden supply stores were up 1.1% month-over-month seasonally adjusted and up 17.2% unadjusted year-over-year;
-Online and other non-store sales were up 0.2% month-over-month seasonally adjusted and up 30% unadjusted year-over-year;
-Sporting goods stores were down 0.6% month-over-month seasonally adjusted but up 14% unadjusted year-over-year;
-Health and personal care stores were down 0.7% month-over-month seasonally adjusted but up 2.6% unadjusted year-over-year;
-General merchandise stores were down 1% month-over-month seasonally adjusted but up 1% unadjusted year-over-year;
-Furniture and home furnishings stores were down 1.1% month-over-month seasonally adjusted but up 0.4% unadjusted year-over-year;
-Electronics and appliance stores were down 3.5% month-over-month seasonally adjusted and down 9.9% unadjusted year-over-year; and
-Clothing and clothing accessory stores were down 6.8% month-over-month seasonally adjusted and down 19.2% unadjusted year-over-year.

Last month, NRF issued its estimates for the 2020 holiday shopping season, with a bullish forecast, calling for an expected 3.6%-to-5.2% annual gain, to between $755.3 billion and $766.7 billion in total sales. In 2019, total U.S. holiday retail sales saw a 4% annual gain, to $729.1 billion, with holiday sales seeing an average annual gain of 3.5% over the last five years.

NRF defines the holiday shopping season as being comprised of holiday retail sales for the months of November and December, excluding sales data from automobile dealers, gasoline stations, and retailers.

NRF President and CEO Matthew Shay said on a media conference last month that 2020 has been unique and this year is expected to be a holiday season unlike any other, as it has dealt with the trio of the pandemic, the election, and civil unrest, and has created challenges. And he also lauded the emphasis and priority that retailers placed on the health and safety of their teams, customers and communities where they work and live, going back to the onset of the pandemic, with retailers serving these communities on the front lines.

NRF Chief Economist Jack Kleinhenz said on the call that 2020 retail sales could exceed the forecasted range or come in below the range, depending on how the contours of the economy develop.

“There is no doubt that we are in the most unusual economic environment in our lifetimes,” he said. “I cannot think of a period with so many simultaneous factors hitting the economy at once when formulating this forecast.”

The NRF’s economist added that there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend.

“Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago,” noted Kleinhenz. “After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday. There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season.”