David Paul Morris/Bloomberg through Getty Images
The Key Takeaways
- U.S. retail sales increased by 0.7% in November, marking the sixth consecutive month sales data came in better than economists' projections.
- Retail activity has seen a recent surge, largely due to a big increase in the number of autos sold. E-commerce companies have also experienced strong growth.
- The retail sales data could complicate the Federal Reserve's thinking on its policy path ahead and might indicate a slow down in shopping in the new year.
A jump in auto sales helped push retail activity higher again in November as consumer spending continued to outpace economists' expectations.
Census Bureau figures released on Tuesday show that U.S. retail sale increased by 0.7% from October to reach $724.6 billion. Dow Jones Newswires, The Wall Street Journal and other analysts surveyed expected that sales would increase only by 0.5% this month. The sales numbers for November were better than the economist’s expectations.
This strong performance is attributed to an increase of 2.6% in auto sales compared with the preceding month. E-commerce sales grew by 1.8% during the same period. The sales of grocery stores, clothing shops and bars and restaurant reported a decline.
What does the retail sales data say about the future of the economy?
It is likely that the strong sales numbers will dominate discussions at Tuesday’s Federal Open Market Committee Meeting (FOMC). Officials are expected to lower interest rates again, but the retail sales data could add more questions about the Fed’s path ahead in light of the strong economic performance.
“Discussion among policymakers is apt to include the strange combination of a cooling in the jobs market even as consumer spending continues to show solid growth,” Wells Fargo economists Tim Quinlan, and Shannon Seery Grein.
Some economists believe that auto sales and sales via e-commerce may have overshadowed the weakness of other retail sectors.
“The underlying details suggest widening price-conscious shopping behavior as more households end 2024 on a cautious note,” Ben Ayers is the Nationwide Senior economist. “This suggests a pullback in economic growth in early 2025 as the momentum for consumer activity is steadily sapped by slowing job growth and still elevated prices.”
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