Retail sales growth slowed again in October, according to data released by the U.S. Department of Commerce Friday, driven by tepid gains at department and specialty stores. The news underscored the current consumer spending slump and tempered the outlook for the upcoming holiday season.
Total adjusted retail sales rose by 1.7% compared to last October, to $447.3 billion, lower than last month’s 2.4% gain and less than economists had hoped for. On a 12-month smoothed basis, sales were up by 2.7%.
The continued decline in gasoline prices and the strengthening job market again helped automobile retailers—who collectively saw their sales jump by 6 percent on 12-month smoothed basis—the most. Taking cars out of the mix, retail sales increased by only 1.7%, their second smallest increase in four months.
The non-store retail sector also enjoyed big gains, and sales, driven by gains by e-commerce players like Amazon, increased by almost 8 percent.
After suffering months of declining sales, department, chain and discount stores edged into positive territory for the second consecutive month, increasing by 0.85% in October, better than September’s 0.4% rise. Department stores continue to lose share to other channels, however, particularly in apparel, where specialty stores (including fast fashion players) have been experiencing higher growth. Macy’s and Nordstrom, who both reported quarterly earnings this week, reported a pronounced slowdown in store traffic.
Apparel specialty stores sales rose by 1.7% on a smoothed basis, their slowest in eight months. Many retailers blamed on the unseasonably warm weather in the month, which kept consumers out of stores stocked with cool weather apparel, and made it more likely that stores will need to resort to discounting to clear out fall goods.
For the combined department and specialty sector, a barometer of overall apparel sales, sales increased by 1.3% in the month, their slowest collective growth rate in six months. In each of the past four months, the inventory-to-sales ratio for the combined sector has risen as well.
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