October retail sales make gains ahead of holiday shopping

United States retail sales, for the month of October, pointed to gains, in advance of the holiday shopping season, and at a time when concerns about the state of the economy are ostensibly increasing.

The United States Department of Commerce’s U.S. Census Bureau reported that October retail sales—at $694.5 billion—rising 1.3% compared to September and were up 8.3% annually. And for the August through October period, retail sales increased a collective 8.9% annually.

Commerce reported that retail trade sales increased 1.2%, from September to October and 7.5% annually, with food services and drinking places up 14.1% annually.

The Washington, D.C.-based National Retail Federation (NRF) reported that its calculation of retail sales, which excludes sales for automotive dealers, gasoline stations and restaurants to focus on core retail, pointed to a 0.7% increase from September and a 6.5% unadjusted annual gain. In September, sales were up 0.5% month over month and up 7.9% year over year.

And it added that NRF’s numbers were up 7.7% unadjusted annually on a three-month moving average through October, with retail sales up 7.5% annually through October, keeping results on track with NRF’s forecast, keeping in line with its forecast that 2022 retail sales will grow between 6% and 8% annually.

“October’s performance is a strong foothold as we go into the holiday season,” NRF Chief Economist Jack Kleinhenz said in a statement. “Spending has gradually slowed but remains solid. Consumers continue to show resiliency despite elevated inflation, rising borrowing costs and widespread macroeconomic uncertainties. With employment and wages growing and shoppers accessing accumulated savings, we expect the trend to continue. Early holiday deals that enticed customers appear to underly the October numbers and more promotions will be seen in November and December, which are historically the big holiday shopping months.”

October sales were up in all but two retail categories on a yearly basis, led by online sales, building materials stores and grocery stores, and increased in five out of nine categories on a monthly basis. Specifics from key sectors include:

Online and other non-store sales were up 1.2% month over month seasonally adjusted and up 11.8% unadjusted year over year;

Building materials and garden supply stores were up 1.1% month over month seasonally adjusted and up 9.1% unadjusted year over year;

Grocery and beverage stores were up 1.4% month over month seasonally adjusted and up 6.8% unadjusted year over year;

Health and personal care stores were up 0.5% month over month seasonally adjusted and up 5.5% unadjusted year over year;

Clothing and clothing accessory stores were flat month over month seasonally adjusted but up 2.5% unadjusted year over year;

General merchandise stores were down 0.2% month over month seasonally adjusted but up 1.8% unadjusted year over year;

Sporting goods stores were down 0.3% month over month seasonally adjusted but up 0.6% unadjusted year over year;

Furniture and home furnishings stores were up 1.1% month over month seasonally adjusted but down 0.6% unadjusted year over year; and

Electronics and appliance stores were down 0.3% month over month seasonally adjusted and down 12.3% unadjusted year over year.

In its holiday retail sales forecast issued earlier this month, with NRF defining the period between November 1 and December 31 as the holiday shopping season, the organization is calling for a 6%-to-8% annual increase, to between $942.6 billion-to-$960.4 billion. In 2021, retail sales were up 13.5% compared to 2020, due likely to the timing of the pandemic in 2020, at $899.3 billion, setting a new all-time record. What’s more, it said that over the last 10 years, holiday retail sales have seen an average increase of 4.9%, with the caveat that pandemic-related spending over the last couple of years represented a large portion of those gains.

Not surprisingly, NRF said it expects e-commerce to play a significant role in 2022 holiday sales, with online and other non-store sales pegged to increase between 10%-to-12%, coming in between $262.8 billion and $267.6 billion, ahead of 2021’s $238.9 billion tally. Which NRF said was largely driven by consumers’ e-commerce activity in buying holiday goods, while adding that it is likely that households will transition some holiday shopping back to in-store shopping and what it called a more traditional holiday shopping experience.

On a media conference call, NRF President and CEO Matthew Shay described 2022 as another historic year in retail and for consumers against the backdrop of challenging economic conditions, in regards to elevated levels of inflation, and rising interest rates, which are playing a role in the way in which consumers are behaving.

“In the face of these challenges and the uncertainty that is taking place across the economy, consumers are taking things a bit more thoughtfully and cautiously but…continue to spend on household priorities,” he said. “The fact that they continue to spend makes sense, when you consider what is happening in the labor market, job growth, rising wages, and how consumers are offsetting the difference between their monthly expenses and their earnings by tapping into savings and, in some cases, taking on additional credit and debt.”

What’s more, Shay highlighted how retail sales since May 2020, 60 days after the onset of the pandemic, have shown that consumers have been consistently driving the economy forward. Taking that a step further, he said that over the first nine months of 2022 retail sales are up 7.2% annually, which is in line with NRF’s calendar year 2022 forecast of 6%-to-8% growth.

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