October Retail Activity Slows From Torrid September

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • October retail sales – measured by prices – ROSE $1.1 billion or just 0.2 percent from September when they were UP $8.9 billion or 1.9 percent;
  • Increase came despite a sharp month-month drop (in dollar volume) in building supply store and gasoline station sales;
  • Excluding auto sales, which ROSE $701 million, October retail sales increased $433 million or 0.1 percent from September;
  • Year-year total sales ROSE 4.3 percent in October compared with a 4.7 percent year-year growth in September

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After a flurry of price increases in September –some in response to hurricanes Harvey and Irma – retail sales, as measured by prices, settled back in October, increasing by just 0.2 percent compared with the 1.9 percent increase immediately after the storms, the Census Bureau  reported Wednesday.

Sales at building supply stores, which jumped 3.0 percent in September indeed declined in October; gasoline station sales which soared 6,4 percent in September dropped as well in October.

The outsized increase at building supply stores can be seen as a direct result of the hurricanes with limited supplies to meet an increased demand. The same [phenomenon occurred following hurricane Katrina in 2005 and hurricane Sandy in 2012.

The strong retail prices leading to higher sales came even as the number of employees in retail stores has fallen, down 100,00o or 0.6percent since January. Several large retailers have announced plans to eliminate or scale back hiring for the holiday shopping season.

Gasoline sales fell as the price of a gallon of gasoline dropped 5.2 percent from September to October to $2.505 in October from $2.643 in September. Gasoline prices jumped 26¢ per gallon in the aftermath of hurricane Harvey, the largest one-month price increase since March 2012.

Though billed as a retail sales report, the Census release notes sales are not adjusted for inflation which makes it more a reflection of merchant than consumer activity. attitudes than consumer activity.

Prices, as interpreted from the Census report, were up at every store category except building and garden supply, gasoline stations and non-store retailers.

Hear Mark Lieberman on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, every Friday at 6:20 am Eastern Time. You can follow him on Twitter at @foxeconomics.

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