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November’s Retail Sales Might Not Augur a Happy Holiday

November’s U.S. retail sales report is in—and now the pressure is for December to deliver.

The U.S. Census Bureau’s November report rose just 0.2 percent on a sequential basis from October, below economists’ expectations and potentially casting a pall over the year-end shopping season and ratcheting up the pressure for retailers to turn in what the industry hopes is some holiday cheer.

Many economists had forecast a sequential increase of 0.5 percent from October’s sales report. October’s sales report was revised to up 0.4 percent. On a year-over-year basis, retail sales in November increased 3.3 percent.

Following the trend in retail sales, online and other non-store sales were up 7.2 percent year-over-year and up 0.8 percent month-over-month seasonally adjusted. But for apparel and accessories retailers, including shoe stores, sales were down 2.9 percent year-over-year and down 0.6 percent month-over-month seasonally adjusted.

November’s report represented the second straight monthly decline for apparel and accessories stores. The department store sector saw sales fall 5.4 percent in November, marking the fourth straight monthly drop, according to Tim Quinlan, Wells Fargo Securities’ senior economist.

November’s shopping activity seemed “muted,” Quinlan said. To hit Wells Fargo’s prediction of up 5 percent for holiday sales, “we would need to see a 1.0 percent gain in our holiday sales measure in December,” he added.

Though it’s not “unprecedented” to see a high spike in the month-over-month gain, it could happened in December because Thanksgiving came a week later this year, according to Quinlan, adding that December’s retail sales will have a much easier compare with a year-ago figures when retail sales posted the largest one-month decline since the recession.

Other commentators were also trying to remain optimistic over the retail sales report, falling back on the late start of the holiday selling season.

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“We continue to expect that strong consumer confidence, wage growth, low unemployment and the strong macro-economic environment in the U.S. will result in 2019 retail sales growth of over 3.5 percent, led by e-commerce players like Amazon; off-price retailers like TJX and Ross; value and convenience-oriented retailers like Dollar General and Dollar Tree, and discounters and warehouse clubs like Walmart and Target,” Mickey Chadha, vice president and retail credit analyst at Moody’s Investors Service, said.

With strong employment and higher wages, retailers are on track for a strong holiday season, the National Retail Federation’s chief economist said.

“November showed modest growth on the surface, but you have to remember that the late timing of Thanksgiving delayed the beginning of the busiest portion of the holiday season and pushed Cyber Monday’s billions of dollars of retail sales into December,” said Jack Kleinhenz, the trade organization’s chief economic watchdog, who believes the November report is more reflective of the “calendar than consumer confidence.”