US retail sales exceeded expectations for October, data out Tuesday showed.
Sales rose 1.7% last month, better than the 1.4% consensus expected (figure below). The range of estimates from nearly six-dozen economists was -0.1% to 2.8%.
September’s gain was revised marginally higher.
The ex-autos print (also +1.7%) was a large upside surprise. Consensus expected a 1% advance. The control group rose an impressive 1.6%. 11 of 13 categories posted monthly gains compared to nine in September.
“This morning’s retail sales report offers what we suspect will prove instrumental in further refining Q4 rebound forecasts,” BMO’s Ian Lyngen and Ben Jeffery wrote. “The US is heading into the holiday spending season and to say uncertainty is elevated regarding the fallout of higher consumer goods prices would be an understatement,” they added.
Inflation has broadened out and the preliminary read on University of Michigan sentiment for November suggested higher prices dealt a body blow to consumer psychology over the past several weeks. The headline sentiment gauge plunged to the lowest in a decade. Survey chief economist Richard Curtin blamed “escalating inflation and the growing belief among consumers that no effective policies have yet been developed to reduce the damage.”
In addition to rising prices, supply chain disruptions threaten to leave shelves bare. That’s an exaggeration, of course, but the threat of shortages is real enough that Joe Biden convened a meeting with the CEOs of Walmart, UPS, FedEx and Target earlier this month.
Walmart on Tuesday reported earnings that beat expectations. The company also lifted its outlook. US comps were up more than 9% in Q3, easily ahead of estimates (figure below).
Home Depot’s results were also better than expected. Comps jumped more than 6%. Apparently, Americans are still busy splurging on home projects amid the property boom.
The average ticket at Walmart rose 3.3%. “Comp sales reflect strong underlying trends, led by in-store traffic and aided by robust consumer spending, due in part to stimulus and inflation,” the company said.
It’s worth noting that spending at restaurants and bars was flat in October, the government’s report showed. Sales were similarly depressed in August during the Delta wave, but rebounded modestly in September.
Spending on gas rose 4% last month, as did non-store retailer sales. The rise in gas station receipts was the largest since March.
Remember that retail sales are in current dollar terms. And, as Bloomberg wrote, “the larger-than-forecast gain may also reflect the pulling forward of holiday shopping as gift-buyers race to beat shipping delays.”
Import prices, meanwhile, rose 1.2% in October, more than anticipated. YoY, prices rose 10.7%. Export prices surged 1.5% MoM and 18% on year.
BAML got it wrong, surprising, that their advantage on credit card info caused them to underestimate retail sales. Given their previous record of accuracy it surprised me, although in fairness they are only 8th most accurate according Bloomberg
I was in Walmart a few days ago and in the 35 plus years I’ve been shopping there I have never seen so many empty shelves. It was like a pre-hurricane feeding frenzy had gone through the place. I’m astonished their sales are actually up. I couldn’t get half of what was on my list.