Retail Sales Unexpectedly Rebound in November | ETF Trends

The Census Bureau’s Advance Retail Sales Report for November revealed a 0.3% increase in headline sales compared to October. This highlights a rebound to consumer spending after October’s brief dip in sales. The latest figure was higher than the anticipated 0.1% monthly decline.

For an inflation-adjusted perspective on retail sales, take a look at our Real Retail Sales commentary.

Retail Sales MoM - 2 Years

Here is the introduction from today’s report:

Advance estimates of U.S. retail and food services sales for November 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $705.7 billion, up 0.3 percent (±0.5 percent)* from the previous month, and up 4.1 percent (±0.7 percent) above November 2022. Total sales for the September 2023 through November 2023 period were up 3.4 percent (±0.4 percent) from the same period a year ago. The September 2023 to October 2023 percent change was revised from down 0.1 percent (±0.5 percent)* to down 0.2 percent (±0.2 percent)*.

Retail trade sales were up 0.1 percent (±0.5 percent)* from October 2023, and up 3.1 percent (±0.5 percent) above last year. Nonstore retailers were up 10.6 percent (±1.6 percent) from last year, while food services and drinking places were up 11.3 percent (±2.3 percent) from November 2022.

The chart below is a log-scale snapshot of retail sales since the early 1990s. The three exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

  1. The red line is a linear regression through the complete data series.
  2. The green line is a regression from the start of the series through the end of 2007 and then extrapolated to the present – thus excluding the Financial Crisis.
  3. The blue line is a regression from the start of the series through the end of 2019 and then extrapolated to the present – thus excluding the COVID-19 pandemic.

Monthly retail sales have been above the red and blue line since March 2021. That signals increased consumer spending that was most likely pent up as a result of the pandemic.

Retail Sales

The year-over-year percent change provides another perspective on the historical trend. Current retail sales are up 4.1% compared to November 2022. Here is the headline series with a callout to the most recent 12 months.

Retail Sales YoY

Core Retail Sales

Core sales (ex Autos) beat expectations by increasing 0.2% in November compared to the expected 0.1% decline.

Retail Sales - Core

And core retail sales are up 3.6% compared to November 2022. Here is the year-over-year chart of core retail sales with a callout to the most recent 12 months.

Retail Sales Core YoY

Retail Sales: “Control” Purchases

The next two charts illustrate retail sales “control” purchases, which is an even more “core” view of retail sales. This series excludes motor vehicles & parts, gasoline, building materials as well as food services & drinking places. The popular financial press typically ignores this series, but it’s a more consistent and reliable reading of the economy. Retail sales control purchases increased 0.4% in November.

Retail Sales - Control

Similar to the retail sales snapshot chart earlier, the chart below is a log-scale snapshot of control purchases since the early 1990s. It includes two of the exponential regressions previously mentioned.

Retail Sales Control YoY

Here is the same series year-over-year. Current control purchases are up 4.7% compared to November 2022.

Retail Sales Headline and Control YoY

For a better sense of the reduced volatility of the “control” series, here is a YoY overlay with the headline retail sales. Note that the two series follow each other closely. But headline sales have more extreme highs and lows than the control series.

Retail Sales Control

Bottom Line: Retail sales unexpectedly rose in November. That is due to all three series (headline, core, and control) increased from October and beat expectations.

Retail sales will impact interest in the SPDR S&P Retail ETF (XRT), VanEck Retail ETF (RTH)Amplify Online Retail ETF (IBUY), and ProShares Online Retail ETF (ONLN).

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