In this morning’s data, Retail Sales increased 0.4% in October, slightly higher than expected and less than the increase in the previous month which was revised markedly higher. Monthly sales for Electronics and Appliance Stores, up 2.3%, and Motor Vehicle and Parts Dealers, up 1.6%, were strong while monthly sales at Miscellaneous Store Retailers, down -1.6%, and Furniture & Home Furnishing Stores, down -1.3%, were relatively weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, decreased -0.1% in October, less than expected and well below the revised figure the previous month.
Overall, headline retail sales increased in October, albeit at lower levels than the previous month, and the control group experienced a slight decrease. The control group was negative due to weak readings in miscellaneous retail and furniture stores coupled with backing out the strong data in the auto segment. Consumers are still spending money in the economy, especially on services as evidenced by the recent increase in the ISM non-manufacturing data.
Meanwhile, some retailers have continued to cite selectivity amongst consumers in their recent reports, such as Home Depot earlier this week. As the new administration’s policies become known and consumers become more comfortable with the impact of those policies, it may lead to further confidence in spending money in the economy. How the Federal Reserve adjusts their policy considering this dynamic will be a key factor for the markets in the coming weeks.
In all, the 10-year US treasury yield moves ticks higher following the report and equity futures are lower as we head into the market open.
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