US retail sales exhibited a remarkable increase in November, climbing 0.7% and surpassing expectations highlighted by polling from Bloomberg, which anticipated a gain of only 0.6%. The growth rate for October was also revised upwards, now standing at 0.5%, compared to the previous report of 0.4%. On an annual basis, retail sales jumped by 3.8%, as indicated by data from the Census Bureau. Ksenia Bushmeneva, an economist at TD Economics, noted in her recent analysis that 'US consumers are finishing 2024 in strong financial shape.' This optimism is largely attributed to a rally in equity markets and rising home prices, contributing to an overall increase in household wealth. In terms of specific categories, spending on motor vehicles and parts saw a significant rise of 2.6% in November.
Meanwhile, nonstore retailers, which include e-commerce platforms, showed a healthy increase of 1.8%. Over the course of the year, auto sales surged by 6.5%, with e-commerce being the top performer, demonstrating an impressive yearly growth rate of 9.8%. Excluding the auto sector, retail sales merely advanced by 0.2% month-to-month, which fell short of analysts' average expectations of a 0.4% increase.
Sales at gas stations experienced a slight uptick of 0.1% month-to-month, although they declined by 3.9% when considering year-over-year figures. Building material and garden equipment stores also contributed positively, with a 0.4% increase noted for the sixth consecutive month, according to insights from TD.
Additionally, sectors like sporting goods, hobby stores, and bookstores recorded a comprehensive improvement of 0.9%. Nonetheless, some categories faced declines, including bars and restaurants alongside food and beverage stores, as highlighted by the official data. The control group, which factors out the more volatile categories of gas, auto, and building components, showed a growth of 0.3% month-to-month—an uptick from the mere 0.1% increase observed in October.
While nominal retail sales demonstrated a robust annual increase of 3.8%, Bushmeneva remarked that 'the picture looks less upbeat' once adjusted for inflation, resulting in a modest growth figure of 1%. She highlighted, 'The latest uptick in inflation reaffirmed that progress in bringing inflation lower is stalling, and the coming year could bring more inflationary surprises,' attributing this potential volatility to factors such as tax cuts, tariffs, and shifts in immigration policy.
Such developments may compel the Federal Reserve to adopt a more cautious approach going into the next year, possibly leading to higher interest rates for consumers than would typically be expected..