United States: Retail sales record weakest reading in six months in October
Retail sales expanded 0.3% on a month-on-month in seasonally-adjusted terms in October, which followed September’s 1.6% increase and marked the weakest reading since April. October’s reading also undershot market expectations of a 0.5% gain, and was likely influenced by the lack of extra fiscal stimulus and a surge in coronavirus cases. The slowdown was primarily driven by weaker growth in motor vehicle and parts dealers sales. In addition, general merchandise stores sales contracted.
On an annual basis, retail sales rose at a softer pace of 5.7% in October (September: +5.9% yoy). Meanwhile, annual average retail sales growth rose to 0.6% in October (September: +0.4%), signaling an improving trend in the retail trade sector.
Looking forward, the acceleration of the Covid-19 pandemic, tightening restrictions in some states and the lapsing of government support measures bode poorly for consumer spending in the coming months, although a vaccine and possible second stimulus package once Biden takes office offer some hope.
According to Maria Solovieva, economist at TD Economics:
“In November, more than a dozen states and the District of Columbia extended restrictive measures, limiting gatherings, reducing capacity at restaurants, advising against traveling and urging citizens to remain at home. Even without renewed shutdowns, the coronavirus resurgence risks depressing spending. A pickup in growth will have to wait for a vaccine, which fortunately, looks to be made available earlier than previously expected in the first half of next year.”