U.S. retail sales increased 0.3% in November

U.S. retail sales increased by 0.3% m/m in November, falling shy of expectations. KPMG Senior Economist Ken Kim discusses key takeaways from this month’s report.

Kenneth Kim

Kenneth Kim

Senior Economist, KPMG US

+1 212-954-6144

Video transcript

Retail sales increased by 0.3 percent in November falling shy of expectations for a 0.8% increase. Despite the shortfall, we think this is a story in which holiday sales were pulled into October due to consumer concerns of store shelves being bare late in the holiday season, due to supply chain constraints. Recall that October retail sales were up a strong 1.8 percent. In November sales of motor vehicles and electronics were both down due to the ongoing chip shortage. But there was some good news in that sales at restaurants and bars were up a solid one percent, despite the spread of the omicron variant. The omicron variant does pose a downside risk to economic activity in the near term, but the current quarter is shaping up to be a solid one. We project real GDP growth of close to seven percent on a seedling adjusted annualized basis up from 2.1 in the third quarter effectively ending the year on a cheerful note.


Holiday comedown: Retail sales predictions were cheerier than reality

If it feels like the holiday season is barreling past, you’re not alone. Many Americans pulled holiday purchases forward this year, curbing retail sales after solid October spending growth.

The latest data from the U.S. Census Bureau shows monthly retail sales rising slower than economists expected, growing a modest .3 percent in November. That’s compared to 1.8 percent just one month prior.

Causes of spending pullback

Multiple complex factors impacted November retail performance.

Significant supply-chain bottlenecks raised concerns over bare shelves and late deliveries, prompting many consumers to snap up gifts earlier in the season.

The ongoing semiconductor chip shortage also continued to tamper retail performance, as sales of motor vehicles and electronics both declined.

Finally, price inflation—at its highest in nearly four decades—may also have limited spending among consumers experiencing sticker shock for gas and general merchandise.

A post-holiday rebound

Although overall retail performance trailed expectations, it’s no reason for winter blues.

Restaurants and bars had reason to celebrate, as sales rose 1 percent, an indication that a more vaccinated public feels safer venturing out. And on an annual basis, broad retail sales growth—which accelerated to 18.2 percent in November—significantly outpaced last year’s levels, when holiday purchases slowed during a winter COVID surge.

In fact, all in all, the current quarter is shaping up to be a strong one—a testament to consumers resiliency to bounce back after each successive wave of COVID. While the spread of the Omicron variant poses a risk, we project the economy to finish the year on a high note, with quarterly GDP growth of nearly 7 percent on a seasonally adjusted annualized basis.