US retail sales ‘anaemic’ despite Black Friday…

The latest US retail sales figures confirm neither Thanksgiving nor Black Friday generated the spending boost anticipated.

Overall, a very mixed set of numbers broadly suggests the US consumer economy is ‘stuck in the middle’. It is not in a state of boom but, more positively, nor is it in a state of bust.

A total growth rate of 1.5 per cent, as measured on a year-over-year basis, is anaemic and compares unfavorably to last month’s 1.8 per cent rise and the year-to-date uplift of two per cent.

As ever, the numbers are somewhat complicated by the inclusion of sales from gas stations, which fell by 19.7 per cent thanks to the continued decline in pump prices across November. When these are excluded the year-over-year growth rate moves from 1.5 per cent to a healthier 3.6 per cent; although this is the second weakest growth rate so far this year after May, so the point about November not being a stellar month still holds true.

All of that said, there are variances at a sector level and, on this front, pure retail (which Conlumino classifies as everything outside of automotive, gas stations, and foodservice) has less reason to be gloomy than the headline numbers initially suggest. While pure retail’s growth rate of three per cent is far from being stellar, it is perfectly reasonable and almost exactly in line with the average growth rate in the year-to-date. As such, pure retail is best characterised as being in a state of moderate, consistent growth. Moreover, this month saw pure retail take its highest share of all retail spend, some 64.2 per cent, since December of last year.

The poor performance came from automotive where sales grew by 4.8 per cent on a year-over-year basis. This is the worst uplift since February 2014.

Foodservice growth was also well below average, coming in at a comparatively modest 5.4 per cent. Both factors are behind the weak headline number. Given these more moderate growth rates, and the fall in gas prices, it is perhaps a little disappointing that more money was not directed into other areas of retail. That it wasn’t is a sign both that consumers remain cautious and careful with their spending, and that demand in some retail categories remains weak.

A particular area of category weakness during the month came from clothing, where sales at specialist retailers dropped by 1.6 per cent on a year-over-year basis; department stores were also affected with a 2.8 per cent plunge. The warmer than average weather continues to dampen demand for heavier winter items and has also resulted in a rash of discounting across a number of retailers which has, in turn, driven some volume but largely at the expense of total value.

Electricals is another area of weakness as it continues to suffer from a relative lack of exciting new products compared to previous years. Sales here fell by 1.8 per cent over the prior year.

  • Neil Saunders is CEO of retail analysts Conlumino.

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