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By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

Retail Sales Inch Higher In October

Headline retail sales rose 0.3% in October, with the September level revised lower by -0.1%. We follow a "control" sales aggregate that excludes sales at car dealers, gas stations and building material stores. That measure showed a slim 0.2% gain, also with a -0.1% revision to September.

As you can see in the accompanying chart, underlying retail sales growth seems to have slowed a bit in recent months, after a torrid run in spring and early summer. Still, even with the somewhat softer sales growth of the last three months, the six-month annualized growth rate for control sales though October is still a healthy 5.3%.

Keep in mind also that we are entering a seasonally volatile period for all retail sales—the Census Bureau’s estimated seasonal adjustment can be off a bit. Thus, we are coming off an October 2018 when control sales showed a robust, 0.7% adjusted gain (again, compared to only 0.2% for October 2019). Yet, before seasonal adjustment, control sales showed a 5.7% gain a year ago and 5.8% last month. So, one reason October 2019 sales show a less robust gain than those of year ago is that Census applied a harsher seasonal adjustment than a year ago.

Census seasonal adjustments depend on a number of factors other than just what month of the year it is, and the more stringent adjustment applied to October 2019 than October 2018 is no doubt justified. Still, it is worth keeping in mind that there is a certain amount of guesswork in adjusting these figures for seasonal vagaries. All in all, the October 2019 sales data were not horrible, and, again, the average growth rate across a span of recent months still looks good. Earlier this year, we “bit” too quickly on an apparent winter sales slowing that then morphed into an apparent spring surge. We are being more perspicacious in judging recent sales trends.

Meanwhile, sales showed gains at most store types, with department stores and online retailers both showing nice gains, 0.4% and 0.9%, respectively. Car dealers also saw decent October sales gain, after strike effects held sales down in September.

Retail Sales Trends
Retail Sales Trends
Source: Census Bureau. As of 31 Oct 19. "Control" retail sales is total sales less vehicle dealers, service stations and building materials stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

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