November retail sales grew at a faster pace than Wall Street analysts had expected, reflecting continued resilience in the American consumer and indicating that the holiday shopping season in the US is off to a strong start.
Retail sales rose 0.7% in November. Economists had expected a 0.6% rise in spending, according to Bloomberg data. Meanwhile, retail sales in October were revised up to a 0.5% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. A 2.4% month-over-month increase in motor vehicle and auto parts sales, as well as a 1.8% increase in online sales, drove the gains.
November sales, excluding auto and gas, rose 0.2%, below consensus estimates for a 0.4% increase. The control group in Tuesday’s release, which excludes several volatile categories and factors into the gross domestic product reading for the quarter, increased by 0.4%, in line with estimates.
Capital Economics North America economist Bradley Saunders wrote in a note to clients Tuesday that the report reflects “consumer resilience.”
“The solid rise in retail sales in November was led by vehicle sales but still showed signs of broad-based strength, with control group sales increasing at a healthy pace too,” Saunders added.
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Wells Fargo senior economist Tim Quinlan wrote in a note to clients that Tuesday’s data points to a “decent” holiday season for retailers. But there are some warning signs that consumer spending could slow headed into 2025.
“The potential for new tariffs at some point next year suggests some new price pressure,” Quinlan wrote. “We expect households to keep spending into the new year, but for the pace of consumption to slow as the year progresses and tariff-related price pressure bites. While the broad household sector is still in a decent financial position today, data suggest consumers are growing more vulnerable amid slowing real income growth and still-high financing costs.”
The report comes as investors continue to closely monitor the health of the US economy and the Federal Reserve dials back its restrictive interest rate policy. To date, economic data has largely been better than expected, a welcome sign for investors as markets shift to accept the Fed may not slash interest rates as quickly as initially hoped.
Investors are awaiting an update on how the Federal Reserve is feeling about the trajectory of the US economy on Wednesday with the release of the central bank’s latest Summary of Economic Projections and a press conference from Federal Reserve Chair Jerome Powell.
