November retail sales data showed some slowing in growth, which was a disappointment given that better October gains had further stoked post-election animal spirits in the financial markets. Headline retail sales were up only 0.1% in November, and the October gain was revised downward by 0.2%. Our “control” sales measure, excluding cars, gasoline and building materials, was up 0.2%, with a 0.1% downward revision to October.
As seen in the accompanying chart, for the last six months as a whole, control sales rose at a 2.7% rate. This is not bad, but it is considerably slower than the 4.6% growth rate that appeared to be in place six months ago.
Within store types, sales growth was soft at vehicle dealers, electronics stores, book and sporting goods stores and, surprisingly, online retailers. The latter had been the darling of the retail analysts earlier this year. The three former store types would typically be hot sectors early in a holiday season. The one sector showing favorable sales growth in November was grocery stores, which had struggled through the first eight months of the year.
As regular readers of this column know, we try not to get too ruffled up by any one month’s number, weak or strong. A month ago, we were circumspect about the strong growth seen then, pointing out that it had been preceded by three soft sales prints over the summer months. We will provide similar perspective here.
Beneath the monthly ups and downs, retail sales growth looks steady. There are no signs of impending doom, but neither are there any substantive indications that consumer spending is set to break out of the generally modest growth trends of recent years. Consumption of services has actually decelerated this year. Goods consumption, reflected by retail sales, has performed better, but even here, growth has been less than spectacular, and today’s news only sustains this narrative.