November retail sales poor m/m, but trend still good

November retail sales poor m/m, but trend still good

Retail sales for November clocked in at -1.1% without adjusting for inflation. After inflation, the number was -1.3% m/m.
While the seasonally adjusted headline was certainly bad, this year tracking the unadjusted numbers is also important due to the havoc COVID is playing with consumption and employment. So the below graph shows the m/m changes over the past 5 years of both the adjusted (blue) and unadjusted (red) numbers:

As you can see, comparing this way shows that the November downturn is, relatively speaking, just a blip. Over the past 10 years November sales, unadjusted, had typically improved over 3% m/m as the Christmas season ramped up. This year sales declined -0.2%. So at the very least, we need to see if December changes the holiday dynamic this year.

On an absolute basis, real retail sales are still up 2.9% since February:

They are also up 2.9% YoY. The below graph subtracts 2.9% from the YoY value to show how the present compares with the historical data:

In short, whether measured since just before the pandemic hit, or YoY, sales still look pretty good.

Finally, as I have pointed out many times, consumption leads employment. It’s even a better match for aggregate hours worked in the economy, as shown in the long term graph below:

So I continue to expect employment to continue to rise – with a lag, and quite possibly a pause during this winter as the pandemic continues to rage – to match the level of sales, probably as more and more people are vaccinated and warmer weather returns.

Indeed, tucked away in the Census Bureau’s report is this important note:

“[Sales in] Nonstore retailers were up 29.2 percent (±1.6 percent) from November 2019, while food services and drinking places were down 17.2 percent (±3.7 percent) from last year.”

When we compare employment in the two above sectors, this is what we see (note the huge difference in the left vs. right scales):

As of November, nonstore retailers have regained almost all their employees since the pandemic started,  but food and beverage retailers are still down over 2 million jobs! It is this sector that will probably catch back up once the pandemic is brought under control.