By Harriet Torry
WASHINGTON -- Shoppers are heading into the U.S. holiday season
with restrained cheer.
Consumers held back on purchases of discretionary items ranging
from clothes to restaurant meals in November. Retail sales
excluding cars and gasoline were unchanged from the previous month,
the Commerce Department said Friday. When those volatile categories
are included, sales rose 0.2%, seasonally adjusted.
Lackluster sales at the start of the holiday shopping season
signaled consumer spending, which accounts for two thirds of the
U.S. economy, could be softening as the fourth quarter
progressed.
November is a key month for retailers, especially for department
stores, clothing outlets and online sellers during the holiday
shopping season. The month includes Thanksgiving Day and Black
Friday, days in which Americans crowd malls and shop online for
deals.
Due to a late Thanksgiving, there are six fewer days in the
holiday-shopping season this year compared with 2018. Cyber Monday
fell in December this year and wasn't accounted for in Friday's
report.
Kim Lefko, chief marketing officer at Ace Hardware Corp., based
in Oak Brook, Ill., said "retailers would love to have had one more
week" for the holiday season, but she added "sales going into
Thanksgiving week and since then have been steadily strong."
The Commerce Department said sales in November declined sharply
across categories that are closely tied with holiday gift-giving,
including clothing, department stores and sporting goods. Spending
at bars and restaurants dropped 0.3% last month, the steepest
monthly decline since last December.
Retail sales account for about a quarter of consumer spending.
Friday's Commerce report doesn't track spending on most services,
such as health care and housing, and the figures aren't adjusted
for inflation.
"In general, the tone for the consumer is good but it's not one
of runaway strength," said Stephen Stanley, chief economist Amherst
Pierpont.
He added that "we've seen so many other indications that
consumers are strong," pointing to higher sales recently reported
by Costco Wholesale Corp.
At Rolling Oaks Mall near San Antonio, Phillip Iversen said
while most of his holiday shopping is done online, certain deals
still bring him to the mall for Black Friday promotions.
Mr. Iversen found a waffle maker at Macy's for about $7 on Nov.
28.
"I think they have to have the price that low now," the
35-year-old said of the deal.
November sales at electronics and appliance stores rose 0.7%
from October but were down 1.5% from November 2018. Sales at
nonstore retailers, a category that includes internet merchants
like Amazon.com, were up 0.8% from October and grew 11.5% from
November 2018.
Richard Derr, owner of Learning Express Toys in Lake Zurich,
Ill., said, "This has been the strangest season I have ever seen
for toys." The season started slow with weak months in October and
November, and demand for December has only just started to pick
up.
"There's just this malaise that we see in shoppers. We know it's
not their pocketbooks," he said, citing the strong labor market and
rising incomes. "There's just an overhang that we see in shoppers
that they're really, really delayed this season."
Data on retail sales can be volatile from month to month,
although the broader trend suggests momentum is slowing.
Year-over-year retail sales increased 3.3% in November, a pullback
from the 4.4% pace clocked just three months ago.
Sales at motor vehicle and parts dealers, which make up about
20% of total retail sales, rose 0.5% in November. Gas station sales
advanced 0.7%.
Still, economists and business executives say that household
spending continues to be supported by a low unemployment rate and
rising wages.
"The U.S. consumer is healthy, and the housing environment is
stable and provides support for home improvement demand," Richard
McPhail, finance chief of home-improvement chain Home Depot Inc.,
said at an investor and analyst conference on Wednesday.
While global uncertainty and trade tensions have taken a toll on
business investment, consumer confidence remains high. The
University of Michigan's preliminary index of consumer sentiment
rose to 99.2 in December, up from 96.8 in November.
Consumers are the main driver of the U.S. economy, and they
continue to benefit from a low unemployment rate and rising wages
in the eleventh year of the current economic expansion.
Still, the Commerce Department report paints a more pessimistic
picture of the start to the holiday season than separate data that
suggested stronger sales, particularly in online spending.
Online holiday sales were up 14% from a year ago at $108 billion
through Thursday, according to Adobe Analytics, which tracks
activity on thousands of websites.
Weaker than expected retail sales in November suggests the pace
of consumer spending eased somewhat as the fourth quarter
progressed, which will feed into the broader pace of economic
growth in the fourth quarter. On Friday, forecasting firm
Macroeconomic Advisers projected a 1.8% pace for the fourth
quarter. The economy expanded at a 2.1% annual pace in the third
quarter.
--Sebastian Herrera contributed to this article.
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
December 13, 2019 17:59 ET (22:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.