US: Retail sales likely increased by about 0.4% in October - RBS

Research Team at RBS, notes that after soft performances in July and August, US retail sales rebounded in September, rising by 0.6%, including a 0.5% gain excluding autos (the best performance for that component since June). 

Key Quotes

“Retail sales may have increased by about 0.4% in October.Auto sales rose slightly, edging up to a 17.9 million annualized pace in October compared to a 17.7 million rate in September, which likely led to a modest rise in auto dealers’ receipts.Excluding autos, sales may also have been up 0.4%.Nominal gasoline station sales are likely to have been boosted in September by another seasonally-adjusted rise in prices at the pump.Meanwhile, chain store sales for October were mostly favorable, as cooler weather may have encouraged shoppers to finally buy seasonal merchandise that had languished on the shelves during the unusually warm September.In addition, hurricane cleanup and repair efforts as well as preparation along the East Coast ahead of Hurricane Matthew likely boosted outlays for building materials and basic items.In any case, retail sales excluding both autos and gasoline may have increased by around 0.3% in October.”

“At this time, we look for real PCE to rise by about a 2.2% annualized rate in Q4.Demand heading into the holiday shopping season seems decent, though certainly not spectacular. Retailers appear generally confident about the upcoming holiday shopping season. The National Retail Federation expects holiday sales excluding autos, gasoline and restaurants to be up 3.6% y/y this season, up from last year’s 3.2% pace. Similarly, the ICSC is calling for physical retail store sales to be up 3.3% y/y this holiday season (versus 2.2% a year ago).”