Economy Watch: Retail Sales Weak in October (But Stronger Except for Car Sales)
- Nov 16, 2015
Retail sales disappointed in October, with overall sales compared with September up a meager 0.1 percent, according to the Census Bureau on Friday. At least, that was the headline number, but in fact most categories of retail sales were a little healthier than that. For one thing, the monthly increase was hampered by auto sales — which have been generally strong in recent years — but which suffered a drop of 0.5 percent for October. Also, gas prices continue to weigh down total retail sales, since the bureau adjusts its numbers for seasonal variations and the like, but not prices. Gas sales dropped 0.9 percent for the month.
On an annual basis, most retail sales are still doing fairly well, which is good news for retail landlords. The total year-over-year increase for October was 1.7 percent, but when gasoline sales are taken out of the equation, then retail sales increased 4.1 percent for the year in October. Despite the monthly drop in car sales, the sector enjoyed an annual increase of 6.2 percent. Furniture stores, which took a serious beating during the recession, enjoyed a sales increase of 5.2 percent compared with last year; food services and drinking places gained 5.5 percent; and building material and garden equipment and supplies deals saw a sales increase of 4.3 percent. Even department stores eked out a 0.5 percent sales increase for the year.
The biggest loser year-over-year in October was electronics and appliance stores, down 4 percent, which probably bespeaks how easy it is to sell electronics online. In fact, the Census Bureau’s nonstore category, which mostly tracks Interest-based sales (with a declining portion of paper catalog sales) has consistently gone up since online sales started. In October, nonstore retailers enjoyed a 1.4 percent upward bump in sales for the month; for the year, the gain was 1.7 percent.
Do the October numbers foreshadow poor holiday sales? Maybe not. Also on Friday, consumer sentiment was reported up for mid-November, and more optimistic consumers tend to spend more. The University of Michigan’s Consumer Sentiment Index csme in at 93.1, up from 90.0 at the end of October. “Overall, the most recent confidence reading was equal to the average during the first ten months of 2015, and higher than any year since 2004,” noted the Survey of Consumers chief economist Richard Curtin. “Buying plans for large discretionary purchases improved, especially for vehicles. Overall, the data indicate an expected rate of growth in personal consumption expenditures of 2.9 percent in 2016.”