U.S. Retail Sales Growth Slows Down in November Amid Inflation
U.S. retail sales showed modest growth in the month of November, as inflation wary shoppers curtailed their discretionary spending. The metric came below analysts’ expectations and slowed down from the month before. Concerns related to product shortages owing to the festering supply chain issues prompted consumers to kick start their holiday shopping well before the Thanksgiving Day. Evidently, a sharp rise in October’s retail sales was noticed.
The moderation in November retail sales can be attributed to lower spending at electronics & appliances stores. Sales at motor vehicle & parts dealers, health & personal care stores, and general merchandise stores also declined. Meanwhile, sales at food & beverage stores as well as food services & drinking places improved. Receipts at gasoline stations were also up. The metric advanced at sporting goods, hobby, book & music stores. Again, sales at furniture & home furnishings stores as well as non-store retailers were unchanged.
Impressively, U.S. retail sales grew for the fourth successive month in November, indicating willingness among consumers to spend and demand to remain decent through December. The Commerce Department stated that U.S. retail and food services sales in November rose 0.3% sequentially to $639.8 billion, following a revised reading of a 1.8% jump in October.
Let's take a look at category-wise sales on a month-over-month basis.
Image Source: U.S. Census Bureau
On a broader note, pent-up savings from stimulus payments and rising wages have been acting as tailwinds for the uptick in retail sales. Markedly, U.S. retail sales climbed 18.2% from November last year amid inflation and supply chain disruptions. We note that the consumer price index rose 0.8% month-on-month in November, following an increase of 0.9% in October. This jump was primarily led by gasoline prices. On a year-over-year basis, the metric rose 6.8%, the fastest pace since 1982.
NRF Chief Economist Jack Kleinhenz said, “Consumers’ financial condition remains healthy and neither stubborn inflation nor COVID-19 appear to have derailed holiday spending despite both being top of mind. 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.”
Sales at clothing & clothing accessories stores and food services & drinking places surged 34.8% and 37.4% year over year, respectively. Meanwhile, receipts at gasoline stations soared 52.3% on a year-on-year basis owing to higher gas prices.
Wrapping Up
Surge in retail sales is a positive indicator of a blissful holiday season, especially when the industry is currently grappling with supply chain woes, rising freight charges and labor shortages. Evidently, retailers are addressing logistical or inventory issues and rolling out strategies to provide a seamless shopping experience, whether offline or online.
Retailers such as Walmart WMT, Kohl's Corporation KSS, DICK’S Sporting Goods DKS, Kroger KR and Macy’s M have also ensured that they are adequately staffed to deal with the curbside and in-store pickup of online purchases as well as doorstep delivery.
While Kohl's Corporation sports a Zacks Rank #1 (Strong Buy), Walmart, DICK’S Sporting Goods, Kroger and Macy’s carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Macy’s and DICK’S Sporting Goods have increased 39.8% and 21.7%, respectively, in the past six months, against the Retail-Wholesale sector’s decline of 6.4%. Again, Kroger and Walmart have advanced 19.2% and 6.7%, respectively, in the said time frame. However, shares of Kohl's Corporation have fallen 4.6% in the aforementioned period.
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