Announced this morning, Retail Sales increased 0.7% in November, higher than expected and slightly above the revised increase in the previous month. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.4% in November, as expected and is a rebound from the negative figure the previous month.
Looking at the various categories, monthly sales for Motor Vehicle & Parts Dealers, up 2.6%, and Non-store Retailers, up 1.8%, were relatively strong while monthly sales at Miscellaneous Store Retailers, down -3.5%, and Food Services & Drinking Places, down -0.4%, were relatively weak.
Overall, headline retail sales increased in November above expectations and the control group rebounded from the previous month. Consumers remain active, especially with purchases from non-store retailers and on motor vehicles. Recent earnings reports note some discernment in what consumers are purchasing, which is highlighted by weakness at food services & drinking places, a relatively discretionary category. As long as individuals are working and comfortable with their employment, they tend to spend money in the economy.
The Federal Reserve meets this week for the final time in 2024. They have a lot to balance considering active consumers, a softer but stable labor market, and sticky inflation. How these dynamics impact their decision, and their outlook, will be key for the markets in the weeks ahead.
In all, the 10-year US treasury yield initially ticks lower following the report but is now little-changed, and equity futures are lower as we head into the market open.
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