The Census said in its report published Friday that seasonally adjusted preliminary estimates for US retail and foodservice sales noted a 0.4% monthly increase to $718.9 billion in October.
On a year-on-year basis, retail and foodservice sales increased by 2.8% from October 2023.
Total sales for the three-month period ending in October increased by 2.3% from the same period last year. On a monthly basis, retail sales increased by 0.4% compared to the September reading and increased by 2.6% year-on-year. Non-store retailers recorded a 7% jump compared to the previous year, while food services and drinking places increased by 4.3% from a year ago.
The rise in retail purchases last month suggests that the economy is growing strongly again in the current October-December quarter, after expanding at a strong annual rate of 2.8% in the previous quarter. Since peaking at 9.1% more than two years ago, inflation has fallen to near-ideal levels. Americans’ net income, on average, exceeded inflation for about 18 months.
However, rising inflation after the pandemic left prices about 20% higher than they were three years ago and weakened Americans’ view of the economy. This was one of the main reasons Donald Trump was able to capitalize on public discontent with the Biden-Harris administration and regain control of the White House in last week’s election.
Retail sales data can significantly impact financial markets. Strong sales figures typically lead to positive market sentiment, while weak numbers can cause lower stock prices and shifts in bond yields. The impact of the currency The US dollar may rise or weaken based on the performance of retail sales, affecting forex trading.
Market reactions: How do financial markets usually react to unexpected changes in retail sale data?
Financial markets often react quickly and significantly to unexpected changes in retail sales data due to their effects on consumer spending and overall economic health. Here are some typical reactions:
1. Stock market movements
Consumer-led stocks: The Shares of retail and consumer goods companies may experience immediate price fluctuations. Positive retail sales data can boost stock prices, while negative data may lead to declines.
Market sentiment: Unexpected changes can affect overall market sentiment. Strong retail sales could signal economic growth, leading to a bull market, while weak sales could trigger bearish sentiment.
2. Bond market reactions
Yield changes: The Retail sales data can affect bond yields. Strong sales could lead to expectations of higher interest rates, causing bond prices to fall and yields to rise.
Safe-haven assets: Conversely, disappointing retail sales may prompt investors to look for safe-haven assets such as government bonds, pushing prices higher and yields lower.
3. Currency fluctuations
Strength or weakness of the US dollar: Retail sales data can affect the value of the US dollar. Strong sales figures may lead to a stronger dollar value as they indicate strong economic activity, while weak numbers may weaken the dollar.
Market speculation: The Traders often speculate on future Fed actions based on retail sales performance, which can lead to currency volatility.
4. Economic Outlook Adjustments
Revision of growth forecasts: Analysts may adjust GDP growth forecasts based on retail sales data. Strong sales can lead to upward revisions, while weak sales may lead to downward adjustments, affecting market perceptions.
Impact of seasonal factors: How do seasonal factors affect US retail sales data?
Seasonal factors significantly influence retail sales data, influencing consumer behavior and sales performance. Here’s how:
1. Holiday shopping seasons
Increased spending: Holidays such as Christmas, Thanksgiving, and Easter usually see an increase in consumer spending as people buy gifts, decorations, and festive foods. Retailers often rely on this period to get a large portion of their annual sales.
Promotional activities: Many retailers offer special promotions and discounts during the holiday seasons, increasing sales. Events such as Black Friday and Cyber Monday have become major retail landmarks.
2. Shop for Back to School
Seasonal demand: The back-to-school period (late summer) is critical for many retailers, especially those selling clothing, school supplies, and electronics. This seasonal demand can increase sales figures during this time.
Budget trends: Households often budget for back-to-school expenses, which can boost overall retail sales in July and August.
3. Seasonal products
Product variability: Retail sales may fluctuate based on seasonal product availability. For example, winter clothing sales rise in the cooler months, while outdoor furniture and gardening supplies see higher sales in spring and summer.
Inventory management: Retailers adjust inventory and marketing strategies based on seasonal trends to increase sales during peak times.
4. Weather Effects
Weather conditions: Extreme weather conditions can affect retail sales, either positively or negatively. For example, harsh winters may boost winter clothing sales but reduce outdoor entertainment equipment sales.
5. Consumer behavior
Psychological factors: Seasonal factors can change consumer behavior, as people often feel more inclined to spend during holiday periods or when they prepare for important life events (such as weddings or holidays).
