Retail sales growth slowed in November

Retail sales rose slower than economists had expected in November following three straight months of sharp increases, according to data released Wednesday by the Census Bureau.

U.S. retailers and restaurants made $639.8 billion in sales last month, up just 0.3 percent from October and well below the 0.8 percent increase projected by analysts. October’s retail sales gain was revised up to 1.8 percent, a 0.1 percentage point increase from the initially reported figure.

Retail sales have risen steadily throughout the second half of the year despite deep supply chain disruptions and the highest annual inflation rate in more than 30 years. While growth continued through November, the pace of consumer spending slowed considerably in key sectors.

Sales at department stores sank 5.4 percent last month and purchases at electronics stores fell by 4.6 percent, the Census Bureau reported. Sales by online retailers were flat, though sporting goods, hobby, music and book stores saw sales rise by 1.3 percent.

While a retail sales slowdown during the holiday shopping season would typically be cause for alarm, November’s tepid growth followed three straight months of expectations-beating increases. 

Retailers and supply chain experts urged consumers to buy their holiday gifts early to ensure they could check off their lists before Christmas. Those warnings may have pulled sales that would have occurred in November  forward into October or September.

“I see this more as a sign that Americans started their holiday shopping early, as opposed to bad news for retailers,” wrote Ted Rossman, senior industry analyst at CreditCards.com, in an analysis.

“Even though November 2021 sales were only up 0.3% from October 2021, they were up 18.2% from November 2020. That year-over-year comparison is more significant, and it illustrates robust expansion.”

Steady price growth could also be weighing on consumer spending.

Consumer prices rose 0.8 percent last month and 6.8 percent in the 12 months leading into November, according to the Labor Department’s consumer price index (CPI), the fastest annual inflation rate since 1982. The intense demand for products in short supply, which fueled much of the year’s inflation, could be fading as prices climb.

“Those year-over-year comparisons are most noteworthy, especially given the tough competition from October. But we are seeing some signs that inflation and supply chain woes may have held November sales back a bit, and those issues didn’t show up as much in October,” Rossman wrote.