US retail sales declined in November by the most in seven months, raising concerns that the resurgence of coronavirus and new restrictions brought in to curb it are undermining the economic recovery.
Retail sales fell 1.1 per cent last month from October, the second consecutive monthly decline, the commerce department said on Wednesday. The drop was steeper than the 0.3 per cent decline that economists had forecast, and followed a 0.1 per cent dip in October.
Several economists warned that the weaker than expected figures — released as retailers prepared for the peak of the holiday shopping season — were an ominous sign for US consumer spending trends.
“With mobility slowing, employment softening and demand hesitant, the holiday season could turn out to be rather miserable,” said Gregory Daco, an economist at Oxford Economics.
Sales at clothing and electronics stores were particularly weak, down 6.8 per cent and 3.5 per cent month-on-month, respectively. Motor vehicle and parts sales slipped 1.7 per cent.
“A tough winter lies ahead,” said Joshua Shapiro, chief US economist at consulting firm Maria Fiorini Ramirez, noting a backdrop of high unemployment. “A significant portion of the job losses we have seen are not going to be temporary.”
Despite the month-on-month figures, which recorded the biggest decline since April, retail sales in November were nevertheless 4.1 per cent higher than they were in the same period a year ago.
Food and beverage store sales rose 10.9 per cent year-on-year as consumers avoided restaurants, bars and cafés. Ecommerce sales, meanwhile, surged 29 per cent from 2019 levels, in the latest sign of how much spending has shifted online.
The focus on the month-on-month decline was a “misleading analysis that ignores the underlying strength of the consumer economy and the true state of retail demand”, said Neil Saunders, retail managing director of the GlobalData consultancy.
He highlighted that retailers had stretched out the traditional seasonal promotions over a longer period than usual this year, causing some spending to shift from November to October.
Shoppers spent an average of $311.75 on holiday-related purchases over the five-day period in November that began with Thanksgiving and ended on Cyber Monday, a decline from last year’s total of $361.90, according to the National Retail Federation.
Consumers have been reluctant to visit brick and mortar stores, against a backdrop of rising coronavirus cases. This week the country’s death toll surpassed 300,000, according to Johns Hopkins University. Several jurisdictions have reintroduced restrictions to curb the spread of the pandemic.
While officials are hopeful that the delivery of the first authorised coronavirus vaccines this week could help turn the page, it will take months before they are widely distributed.
A rebound in the labour market has, meanwhile, moderated in recent months, with new jobless claims climbing again. Congressional leaders have come under pressure to push through fresh stimulus to help prop up the economy.
The retail sales figures on Wednesday highlighted a wide divergence within the sector, rather than providing evidence of a broad decline in US consumer spending, Mr Saunders said. Department store sales declined 19 per cent year-on-year.
“Polarisation is increasing,” he added. “If this trend continues, there will inevitably be more retail casualties as we move into 2021.”