Retail Sales: Solid Rebound, Trend Still Decelerating

Bottom Line: Retail sales rebounded in October after two months of below expectation growth. Core Sales ex-gasoline stations and ex-building materials during October were modestly above its Q3 average, suggesting that Q4 started with positive GDP contributions from real consumer spending. The furniture and home furnishings sector remained weak and is now down 3% annualized in the last three months. On a trend basis core retail sales are showing signs of deceleration overall with three month annualized growth of just 2.9%, about half the 12-month average pace. The notable standout, on the positive side remains "nonstore" retailers as online shopping continued to see accelerating growth. Retail Sales ROSE by 0.8% in October, compared with the market consensus for an increase of 0.5%. The September estimate was revised lower from 0.10% to -0.05%. Retail sales are now 4.6% ABOVE their year ago level; just a year ago, the year over year growth rate was 5.4%. Spending at motor vehicle dealers climbed by 1.1%. Core Retail Sales ROSE by 0.7%, compared with the market consensus for an increase 0.5%. The September estimate was revised lower from 0.30% to -0.05%. Core retail sales are now 5.9% ABOVE their year ago level; just a year ago, the year over year growth rate was 5.1%.

• In October, gains at gasoline stations, primarily due to high gasoline prices (+3.5%),
• building materials (+1.0%),
• general merchandise stores (+0.5%), and
• nonstore retailers (+0.4%).

Gains were partially offset by declines in furniture & home furnishing (-0.3%), health and personal care. Core Retail Sales ex Gasoline ROSE by 0.32% and are now 4.7% ABOVE their year ago level; just a year ago, the year over year growth rate was also a moderate 4.7% .