October Retail Sales - Not Bad Beyond Cars

October retail sales fell short of expectations advancing 3.5% year-over-year but marking no growth compared to September in nominal terms.  Adjusting for inflation*, spending advanced 0.5% year-over-year and retreated 0.3% month-over-month.  Lower spending at motor vehicle dealers and lower gas prices masked solid spending across several other categories – an indication that consumer spending was resilient in the early weeks of the holiday shopping season as shoppers sought out deals.  This pattern could foreshadow slower spending as the holiday season progresses.  While wealthier shoppers continue to support overall outlays, sentiment has declined among lower income consumers amid sticky inflation and a softer job market.

• Real (inflation adjusted) retail sales advanced 0.5% year-over-year.  In October, retail sales grew 3.5% nominally netting real growth of 0.5% after adjusting for 3.0% inflation. Higher spending at brick-and-mortar retailers (+9.5%), online retailers (+9.0%) and restaurant dining (+4.1%) was partially offset by slower spending at the pump (+1.9%) and a decline in building materials (-4.5%).  Seven of thirteen categories advanced in real terms.

• Real (inflation adjusted) retail sales declined 0.3% month-over-month.  In October, nominal retail sales levels were unchanged from September netting a real decline of 0.3% after adjusting for 0.3% inflation.  Higher spending at online retailers (+1.8%) and brick-and-mortar retailers (+1.5%) was partially offset by declines at the pump (-0.8%) and on motor vehicles (-1.6%).  Seven of thirteen categories advanced in real terms.

*The October Consumer Price Index (CPI) report was not produced due to the government shutdown.  Real growth figures were calculated using September inflation levels.  The November CPI report is scheduled for Thursday December 18.