U.S. Retail Sales (October 2023)
Shernette McLeod, Economist | 416-415-0413
Date Published: November 15, 2023
U.S. retail sales retreat in October for the first time in seven months
- Retail sales fell by -0.1% month-on-month (m/m) in October, down from September's reading of 0.9% growth. This was slightly better than consensus forecast calling for a larger decline of -0.3%.
- Trade in the auto sector pulled back on the month falling by -1.0% m/m, reflecting a decline in sales at motor vehicle dealers (down -1.1%) which was partially offset by growth at automotive parts and accessory stores (up +0.4%).
- Sales at gasoline stations fell -0.3% m/m relative to the 1.0% increase recorded in September, largely reflecting the pullback in gas prices. The building materials and equipment category declined by -0.3% m/m for a second consecutive month.
- Sales in the retail sales "control group", which excludes the above volatile components (autos, building materials and gas) and is used to estimate personal consumption expenditures (PCE) came in at 0.2% m/m. September's figure was also revised upwards to show an increase of 0.7% instead of the previously reported 0.6%.
- Among the control group, the largest contribution came from sales at health and personal care store (+1.1% m/m), food and beverage stores (+0.6%) and non-store retailers (+0.2% m/m).
- The main categories posting declines were miscellaneous stores retailers (-1.7% m/m), sporting goods and hobby store (-0.8% m/m), and department stores (-0.2% m/m).
- Food services & drinking places – the only services category in the retail sales report – was up 0.3% m/m.
- And there you have it. The pullback in retail spending in October did not come as a surprise as market participants have been forecasting a retrenchment in sales for some time. While part of the decline in the headline number reflected lower prices for gasoline, sales in the key control group also lost momentum, though still maintaining its seven month growth streak. Today's numbers kick off the fourth quarter on a softer note, with real consumption expenditure currently tracking around 1.8% for Q4.
- The slowdown in spending reported today, combined with yesterday's lower inflation numbers is another step in the direction the Fed wants to go. As higher interest rates continue to work through the economy, spending is likely to remain much more tepid, relative to the boil witnessed in Q3.
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.