Americans are out shopping in force again.
Consumers got a head start on their holiday shopping in October, sending U.S. retail sales up 1.7 percent to $638.2 billion on top of September’s 0.8 percent gain. October’s increase represented the largest gain in U.S. retail sales since March, and it was the third straight month of increases. When compared with the same year-ago period, sales jumped 16.3 percent and spiked up 21.4 percent above 2019’s pre-pandemic level. The measure of retail sales excludes automobiles, gasoline and food services.
Retail trade sales rose 1.9 percent from September, and were up 14.8 percent above last year’s figures. By segment, apparel and accessories stores saw sales slip 0.7 percent compared with September, while department store sales rose 2.2 percent month-to-month. At non-store retailers, primarily the realm of e-commerce sites, sales rose 4 percent.
“Retail sales data for October reflects the enduring strength of consumers’ finances and willingness to spend as the holiday season gets underway,” Matthew Shay, president and CEO of retail trade organization the National Retail Federation, said. “The robust balance sheets of American households are being met by retailer preparation and hard work to provide products that consumers want at competitive prices.”
Shay said that despite significant challenges including supply chain issues, labor shortages and rising inflation, retailers continue to safely serve customers online and in stores. “Today’s numbers show that consumers are getting a jump on their holiday shopping. We continue to urge consumers to shop early and shop safely, and we fully expect this holiday season to be one for the record books,” he said.
NRF is projecting the holiday season’s sales growth to be between 8.5 percent to 10.5 percent for the November-December period. NRF chief economist Jack Kleinhenz last month said that early shopping in October could pull some sales earlier into the season. On Tuesday, he said that consumers “remain in high gear moving into the last months of the year” and that even though they may have begun shopping early to avoid inventory shortages, “November and December are still when they do most of their holiday shopping, so much remains ahead of us.” And while concerns about high prices are weighing on consumer sentiment, NRF’s chief economist said that hasn’t yet held back their spending.
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“The 1.7 percent increase in October retail sales bested consensus expectations and sets up holiday sales for another record gain, but the real insight in today’s report is how wallet share is shifting as consumers reprioritize spending amid the highest inflation in 30 years,” according to Tim Quinlan and Shannon Seery, economists at Wells Fargo in a report on Tuesday.
They noted that prices played a role in lifting the monthly sales figures once again, with core goods consumer prices up another 1 percent in October. And inflation is starting to weigh on consumers, something that was evident in last week’s consumer sentiment report from the University of Michigan. “If price gains outstrip spending increases, that implies a volume decline,” they concluded.
The economists noted that despite the importance of the last few months of the year for retailers, in three out of the past four years retailers have seen holiday sales tumble in the month of November or December. “Last year, sales fell in both November and December and while it was a record annual increase for holiday sales, it was a disheartening way to finish the year. This year could see a similar loss of momentum,” they cautioned.
Meanwhile, U.K.’s footfall tracking firm Springboard on Tuesday said that pedestrian traffic continued to strengthen across U.S. retail destinations last week with a second consecutive rise. The data firm added that the rise in pedestrian traffic “coincided with the first early holiday events taking place in a number of downtowns across the U.S.”