Retail sales surprised to the upside in November but CIBC warns that there are signs of deceleration that should mount in the months ahead.
The CIBC report on US November advance retail sales highlights a modest increase, signaling a positive start to the holiday shopping season. Retail sales rose by 0.3%, beating expectations of a 0.1% drop. This improvement was somewhat offset by a downward revision of the previous month's figures, especially for the control group where the -0.2 pp downward revision erased the +0.2 pp beat.
They noted impressive months from sporting goods, clothing and furniture but warned it could simply be a reflection of weakness last month.
"Looking at the total retail sales basket, 8 of 13 categories saw higher spending on the month, an improvement from the prior month. That could have been helped by the drop in gasoline prices that freed up some money for spending elsewhere," economists at CIBC write.
Overall, the control group is 5% above year-ago levels, which is a slowdown in real terms but comes after a blockbuster 2022 for spending.
Looking ahead, they see a further cooling.
"After a surge in the fall, retail activity appears to be decelerating in nominal terms, while still suggesting moderate volume growth in Q4. A further deceleration is likely, given the low household saving rate. A rise in saving, coupled with a slowdown in the labor market, should underpin slower consumption in the winter months."
The US dollar is near the lows of the day, particularly against the euro which is now up 116 pips to 1.0988.
