FILE PHOTO: People shop for clothes at a Target retail chain in Westbury, New York, U.S., May 20, 2021. REUTERS/Shannon Stapleton/File Photo
December 15, 2021
By Lucia Mutikani
WASHINGTON (Reuters) -U.S. retail sales increased less than expected in November, likely payback after surging in the prior month as Americans started their holiday shopping early to avoid empty shelves.
A rotation in spending from goods back to services as well as shortages and the resulting higher prices also appear to have held back retail sales last month, with the report from the Commerce Department on Wednesday showing a sharp drop in receipts at electronics and appliance stores. Online retail sales were unchanged.
“This may be attributed to consumers doing holiday shopping earlier than usual because of the expected delays due to supply chain and inflation issues,” said Marwan Forzley, chief executive officer at Veem, an online global payments platform.
Retail sales rose 0.3% last month. Data for October was revised higher to show retail sales surging 1.8% instead of 1.7% as previously reported. Sales have now risen for four straight months and increased 18.2% year-on-year. Economists polled by Reuters had forecast retail sales rising 0.8%. Estimates ranged from as low as being unchanged to as high as a 1.5% increase.
Several of the top U.S. retailers reported in mid-November that they had noticed an earlier start to holiday shopping.
Trillions of dollars in COVID-19 pandemic relief from governments across the globe fueled demand for goods, straining supply chains. The resulting shortages, ranging from motor vehicles to furniture and electronics, have raised goods prices.
Consumer prices increased a solid 0.8% in November, with the year-on-year gain of 6.8% the largest since June 1982.
MIXED BAG
The moderation in retail sales, which are mostly goods, reflected shortages. Receipts at auto dealerships dipped 0.1% after accelerating 1.7% in October. Automobiles remain scarce because of a global semiconductor shortage. Sales at electronics and appliance stores fell 4.6%.
But sales at service stations increased 1.7%, lifted by higher gasoline prices. Receipts at building material stores rose 0.7%. There were also increases in receipts at sporting goods, hobby, musical instrument and book stores.
Sales at clothing stores rose 0.5%. Receipts at restaurants and bars increased 1.0%. Restaurants and bars are the only services category in the retail sales report. These sales were up 37.4% from last November.
The modest retail sales gain likely does not change views that the economy is regaining steam after a slowdown in the third quarter that was triggered by the Delta variant of the coronavirus and rampant shortages.
The report was released as Federal Reserve officials prepared to wrap up a two-day policy meeting.
The U.S. central bank is expected to announce that it will speed up the tapering of its massive monthly bond purchases, against the backdrop of soaring inflation. An early interest rate increase next year is on the table.
Excluding automobiles, gasoline, building materials and food services, retail sales dipped 0.1% after accelerating 1.8% in October. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. More than half-way through the fourth quarter, consumer spending is above its third-quarter pace.
“Nevertheless, with disposable incomes now falling in real terms and the rapid spread of the Omicron variant likely to exert at least some drag on high-contact services activity, real consumption growth looks set for much slower growth over the months ahead,” said Andrew Hunter, a senior economist at Capital Economics.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity rose at a 1.7% annualized rate in the third quarter. More than half-way through the fourth quarter, consumer spending is above its third-quarter pace.
Economic growth estimates are as high as an 8.7% rate. The economy grew at a 2.1% pace in the third quarter.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)
Source: One America News Network
