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US Retail Sees Slower Growth Than Expected

Dec 16, 2021 5:10 AM   By Rapaport News
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US retail sales missed analysts’ forecasts in November amid high inflation and an earlier start to holiday shopping.

Though revenue grew 0.3% from the previous month, according to data from the US Census Bureau, the rise was much lower than the 1.8% month-on-month increase in October. In September, sales were up 0.7% over August. November revenue jumped 18% compared to the same period a year ago.

“The strong early start to the holiday shopping season fizzled out pretty fast in November,” Sal Guatieri, senior economist and director of economics for BMO Capital Markets, said Wednesday. “It’s pretty clear that shoppers pulled spending into the previous month amid feared product shortages and delivery delays.”

However, the National Retail Federation (NRF) saw the slight rise as an indication that this year’s holiday sales were on track to break records.

“Consumers’ financial condition remains healthy, and neither stubborn inflation nor Covid-19 appear to have derailed holiday spending despite both being top of mind,” said NRF chief economist Jack Kleinhenz. “Recent labor-market progress has helped propel incredibly strong demand, and most shoppers have the income and savings to absorb higher prices driven by the pandemic and supply-chain disruptions.”

The NRF predicted holiday sales would grow between 8.5% and 10.5% year on year during the November-to-December period, and could increase as much as 11.5%. Even at the low end of that range, both revenue and the growth rate would set new records, the NRF explained.

In November, sales increased year on year in six of the nine categories the US Census Bureau monitors. The clothing and accessories segment — which includes jewelry — saw the highest growth, climbing 35%. Revenues for the category climbed 0.5% versus October. Online sales across all products rose 15% year on year and were flat compared to the previous month.

Despite the NRF’s positive outlook, BMO is concerned about the effect of the spike in inflation on consumer spending.

“The upward revision to an already-strong prior gain in retail sales removes some of the sting from the disappointing November report,” Guatieri added. “However, it still carries an ominous warning that high and rising inflation is draining the spending power of households that were unable to accumulate much savings during the pandemic. Inflation, and the possible need for much higher interest rates to control it, poses a meaningful risk to the economic outlook.”

image: A woman shopping at the mall. (Shutterstock)
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Tags: BMO Capital Markets, Jack Kleinhenz, National Retail Federation, NRF, Rapaport News, Sal Guatieri, US Census Bureau, US retail sales
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