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U.S. Retail Sales (October 2024)

Andrew Foran, Economist | 416-350-8927

Date Published: November 15, 2024

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Retail sales remained solid in October, led by strong vehicle sales

  • Retail sales rose 0.4% month-on-month (m/m) in October, down from the upwardly revised September 2024 gain of 0.8%, but ahead of the consensus forecast calling for an increase of 0.3% m/m.
  • Trade in the auto sector rose 1.6% m/m, as the decline at automotive parts and accessory stores (-2.0%) was more than offset by the large increase at motor vehicle dealers (+1.9%).
  • Sales at gasoline stations rose 0.1 % m/m in October, driven by higher volumes as gas prices fell on the month. The building materials and equipment category rose by 0.5% m/m.
  • Sales in the "control group", which excludes the volatile components above (i.e., gasoline, autos and building supplies) and is used in the estimate of personal consumption expenditures (PCE), fell 0.1% m/m, a sizeable deceleration from the upwardly revised 1.2% monthly gain in September.
  • Modest gains were recorded at non-store retailers (0.3% m/m) and department stores (0.2% m/m). 
  • Sizeable declines were recorded by miscellaneous stores (-1.6% m/m), sporting goods, hobby, book, & music stores (-1.1% m/m), and health & personal care stores (-1.1% m/m).
  • Food services & drinking places – the only services category in the retail sales report – rose 0.7% m/m. September's data was also revised up to 1.2% (previously 1.0%).

Key Implications

  • Retail sales were higher than expected in October due to an outsized uptick in motor vehicle sales, however if motor vehicles are excluded then retails sales were flat on the month. Nevertheless, the 3-month average for retail sales rose from 0.2% in September to 0.6% in October on the back of material upward revisions to the prior month's data. It's possible that Hurricane Milton may have distorted sales readings last month, although clean-up and recovery efforts may lead to higher readings in the months ahead.
  • U.S. consumption remains healthy on aggregate, supported by a stable labor market and solid real income gains. Our tracking currently puts fourth quarter annualized consumption growth above 3% and only slightly below the third quarter's strong reading. While we currently expect the Federal Reserve to cut by 25 basis points in December, risks surrounding a potential pause to end the year have risen, with markets pricing in roughly 40% odds of that outcome as of the time of writing.

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