US Retail Sales Rose 0.3% in October

Retail Sales Continue to Rise Despite the Ongoing Pandemic

retail sales

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The most recent U.S. Retail Sales Report shows a modest increase in retail sales in October, rising 0.3% since September, and 5.7% since this time last year. Total sales for August through October 2020 were up 5.1% year over year. Sales have been increasing since June after record lows were seen in the spring during the height of the coronavirus pandemic.

Key Takeaways

  • U.S. retail sales saw a 0.3% month-over-month increase in October 2020.
  • Sales were also up year over year by 5.7%.
  • Retailers that saw monthly sales rise the most include online retailers and building material and gardening supply stores.

Clothing and accessory stores saw a 4.2% decrease from September, and sales were down 12.6% unadjusted year over year. Department store sales were also down 4.6% from September, as were sporting good stores, which saw a decrease of 4.2% month over month.

Online and other non-store sales rose by 3.1% last month and were up about 29% unadjusted since October 2019. This reflects consumers continuing to shop online due to the ongoing pandemic and starting their holiday shopping early. Health and personal care stores, such as drug stores, saw no real change for the month but an increase of 3.8% year over year. Building and garden supply stores saw a small month-over-month increase of 0.9%, but rose 19.5% unadjusted year over year.

Restaurant and bar sales saw no significant change, and sales are still down about 14% from this time last year. Food and beverage stores saw no real change month over month and were up about 10.3% unadjusted year over year.

Car and parts dealers saw an increase in sales of almost 11% year over year, but just 0.4% month over month. Gas station sales were up 0.4% since September but were still down 14% since October 2019.

The Retail Sales Report Can Predict Economic Growth

The U.S. Census Bureau report measures the U.S. retail industry each month by surveying about 5,500 employer firms to collect retail sales data. It shows the total sales and the percentage change for that month and also reports on the percentage change in year-over-year (YOY) sales for the last 12 months.

Retail sales signal trends in consumer spending, which drives almost 70% of economic growth. The retail industry alone supplies almost 52 million jobs. In addition to retail, personal consumption expenditures include services like housing and health care. 

Since the retail sales report comes out monthly, it is a more current measurement of economic health than gross domestic product, which is reported quarterly. You can use the retail sales report to predict GDP before that news comes out. Keep in mind that the retail sales report doesn't adjust for inflation, while GDP does.

To predict GDP, look at year-over-year retail sales. 

GDP is an annualized number. GDP growth compares this annualized figure to the prior year. Keep in mind that GDP growth uses real GDP figures and they eliminate the effects of inflation. The YOY retail sales reports use nominal GDP figures. GDP growth reports and YOY retail reports could have significant differences if inflation is very high or if there is deflation

When using the retail sales report for forecasting, you should also look at other statistics. Most importantly, look at orders for durable goods—that's another great leading economic indicator. 

Pay attention to forecasts for specific holiday sales. The National Retail Federation (NRF) surveys shoppers to find out how much they plan to spend on the major holidays. The report on Halloween spending provides early clues for the holiday shopping season. The NRF also reports on retail sales for Valentine's Day, Mother's Day, Father's Day, and Back to School. 

About 20% of annual retail sales occur during the holiday season.

Retail Sales Outlook

In February 2020, the NRF had predicted 2020 retail sales would grow between 3.5% and 4.1%. That was before the COVID-19 pandemic caused states to issue shelter-in-place orders. Just one month later in March 2020, the National Retail Federation predicted that the industry would lose $430 billion in revenues in the third quarter of 2020. At least 630,000 non-essential retail outlets have already closed during the pandemic.

Jan Rogers Kniffen, a retail industry consultant, estimated that 30 well-known brands might be forced to file for bankruptcy protection, according to an article by Many retailers may have trouble meeting loan obligations. and apparel retailers may have a hard time selling out-of-season apparel. They may have to cancel orders with manufacturers, too.

While retailers saw improved sales as shelter-in-place orders were lifted, many states are implementing curfews and other measures as infection rates continue to rise. A real recovery won't occur until a safe and effective vaccine is developed. In this pandemic, the future of retail depends on a virus.

Article Sources

  1. U.S. Census Bureau. "Advance Monthly Sales for Retail and Food Services, Page 1." Accessed Nov. 19, 2020.

  2. National Retail Federation. "October Retail Sales Grew as Consumers Started Holiday Shopping Early." Accessed Nov. 19, 2020.

  3. U.S. Census Bureau. "Advance Monthly Sales for Retail and Food Services, October 2020," Page 6. Accessed Nov. 19, 2020.

  4. Federal Reserve Bank of St. Louis. "Personal Consumption Expenditures." Accessed Nov. 19, 2020.

  5. National Retail Federation. "Retail's Impact." Accessed Nov. 19, 2020.

  6. Bureau of Economic Analysis (BEA). "Gross Domestic Product." Accessed Nov. 19, 2020.

  7. U.S. Census Bureau. "Why New Data on Durable Goods Matter." Accessed Nov. 19, 2020.

  8. National Retail Federation. "Retail Holiday and Seasonal Trends." Accessed Nov. 19, 2020.

  9. National Retail Federation. "The State of the Economy Heading Into the Holidays." Accessed Nov. 19, 2020.

  10. National Retail Federation. "NRF Says Consumers Continue to Drive Economy, Forecasts Retail Sales Will Grow 3.5% to 4.1%." Accessed Nov. 19, 2020.

  11. National Retail Federation. "How Small Retailers Are Adapting to COVID-19." Accessed Nov. 19, 2020.

  12. Coresight Research. "US Retailers Teeter on the Brink as 630,000 Outlets Close." Accessed Nov. 19, 2020.

  13. PYMNTS. "Coronavirus Closures Affect 630,000 Retail Businesses." Accessed Nov. 19, 2020.