Q3 retail sales on pace for a better holiday

The pace of retail spending looks a bit stronger through the third quarter—between 3.5% and 4.0% growth—in the wake of September results and prior-month data revisions.

The third-quarter results put retail sales on pace for a better holiday this year compared with a year ago. That’s consistent with the MacroSavvy™ forecast for the holiday, which can be found here.

These results exclude auto, fuel, and restaurant sales—which is where hurricane and other weather effects show the most impact on retail sales. Excluding those sectors, the weather effects are less evident and often result in offsetting gains and declines over time.

Here is more on what the latest government-reported retail numbers say:

  • Monthly trend. The three-month trend is approaching a 4.0% pace as measured in seasonally adjusted terms. On an unadjusted basis, the trend is see-sawing around a 3.5% pace (at retail channels excluding autos, fuel and restaurants).
  • Quarterly trend. The third-quarter trend between 3.5% and 4.0% is similar to the second quarter and well above the approximately 3.0% pace in the second half of last year. That weak year-ago comparison period will help sustain a stronger finish to 2017.
  • Annual trend. A strengthening trend to end the 2017 will help turn around a year-to-date pace of growth that has been below average compared with recent years in terms of unadjusted retail sales measures. Restaurant and auto sales have slowed significantly—although they still remain healthier than traditional retail segments (excluding restaurants and autos).
  • E-commerce effects. With a few exceptions—notably home improvement stores of late—below- average growth is focused among brick-and-mortar retail channels (e.g., apparel and consumer electronics stores) as sales gains remain skewed toward e-commerce retailers. For more on the e-commerce outlook, go here.

The latest data suggest that the year-to-date retail sales pace is running below the stronger pace forecast for 2017 by about half a percentage point. MacroSavvy™ has forecast a 2017 gain of 4.0% in retail sales excluding autos, fuel and restaurants, which would be slightly stronger than 2016.

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