US consumers spent less than expected coming into the start of the holiday shopping season, indicating reduced economic growth. Retail sales came in at just 0.2% growth for November compared to 0.5% expected, while October sales were revised slightly higher.
- US retail sales grew by less than half the expected amount at just 0.2% in November.
- Online sales increased, while in-store purchases decreased.
- The figures indicate an unanticipated slowdown in Q4 2019 coming up to the holiday season.
Retail sales comprise part of consumer spending which accounts for two-thirds of the US economy. The sudden fall in sales came as a surprise to analysts expecting 0.5% growth, and the slowdown in this key area does not inspire confidence for US economic expansion.
Clothing sales and sales at department stores fell, while online sales rose. Motor vehicle and parts dealers saw 0.5% growth in sales, and electronics stores saw a 0.7% increase. Removing the volatile components of autos, petrol, and building materials, sales rose just 0.1% vs. 0.3% expected. Online and mail-order sales rose 0.8% in November and 0.6% the month before. Furniture stores saw 0.1% growth in sales, while sales dropped 0.3% at restaurants and bars and 0.5% ant hobby, instrument, and book stores.
— Chander Singh (@ChanderSinghEsq) December 13, 2019
The soft sales are particularly significant given the time of year, which usually has significantly higher sales than average. Sales rose 3.3% annually last month. The timing of the Cyber Monday sale may have skewed figures slightly, as it came on December 2 rather than late November as usual. The retail figures are in contrast with more upbeat reports from labor and manufacturing, and could end up creating a drag on Q4 GDP figures. The economy grew 2.1% in Q3, and the slow growth in core retail sales could result in reduced estimates for Q4 which are already at just 1.8%.
Gold prices have risen following the release of the report from the Commerce Department. Spot gold last traded at $1,472.82/oz, up 0.70% with a high of $1,474.12/oz and a low of $1,463.11/oz. The low sales may have contributed to reduced risk appetite in the financial markets, increasing the use case for gold as a safe have asset.