Retail sales increased more than expected in November.
Advance estimates of U.S. retail and food services sales were $705.7 billion in November, marking a 0.3% increase from the previous month and a 4.1% jump from November 2022 levels, the U.S. Census Bureau announced Thursday. Total retail sales from September through November were up 3.4% compared to the same 3-month period a year ago.
Of the 13 types of food service and retail stores measured by the U.S. Census Bureau, nine categories saw year-over-year increases in November.
The categories with increases include food services and drinking places (+11.5%); nonstore retailers (+8.3%); miscellaneous store retailers (+2.7%); general merchandise stores (+2.6%); sporting goods, hobby, musical instrument, and book stores (+0.3%); clothing and clothing accessories stores (+1.2%); health and personal care stores (+8.6%); food and beverage stores (+2.7%); and motor vehicle and parts dealers (+4.0%).
“The strength in November followed a weak reading in October, so real consumption growth is still tracking lower in Q4 than in Q3,” wrote Michael Pearce, Oxford Economics lead U.S. economist, in a research note, Yahoo Finance reported. “We expect a continued slowdown in the labor market and the drag from elevated interest rates to weigh on spending growth heading into 2024.”
The categories with year-over-year decreases in November include furniture and home furniture stores (-5.5%); electronics and appliance stores (-0.2%); building material and supplies dealers (-2.8%); and gasoline stations (-11.7%).
“The resilience of the consumer provides credibility to the Fed achieving a soft landing but should also be a signal to markets that the Fed is not likely to cut rates as quickly and as much as the markets now have priced in,” wrote Kathy Bostjancic, Nationwide chief economist, in a research note, per Yahoo Finance.
“The stronger economic activity remains, the slower inflation declines, and the slower the Fed responds with rate cuts,” she added.
As reported by The Dallas Express, the Federal Reserve agreed to hold rates steady at between 5.25% and 5.50% at its policy meeting in December. In addition to pausing rates, the policy-setting Federal Open Market Committee also released an updated Dot Plot or Summary of Economic Projections.
The median forecast by participants is that the Fed will lower interest rates by 75 basis points by the end of 2024.
