Conflicting Signals About Whether Holiday Sales Are Strong

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The National Retail Federation keeps track of both brick-and-mortar and online sales. Its research is considered the industry’s gold standard. However, it is hard to tell from its most recent NRF data about the holidays whether the retail industry is doing well or not. The industry association issued a statement:

Retail sales in November increased 0.9 percent over October on a seasonally adjusted basis and were up 6 percent year-over-year unadjusted, according to calculations released today by the National Retail Federation. Online and other non-store sales grew 10.5 percent year-over-year, reflecting the growth of online shopping. The numbers exclude automobiles, gasoline stations and restaurants.

Six percent is strong when traditional retail, which has struggled mightily, is included. Online sales of just above 10% is nothing close to the year-over-year numbers usually posted by, which means the rest of the industry must have e-commerce growth in the single digits. That is not enough, in most cases, to match store sales erosion.

The association added:

November’s results indicate that retail sales for the holiday season – defined as November and December – are on track to meet or exceed NRF’s holiday sales forecast for an increase between 3.6 and 4 percent over last year.

Since the most favorable measures are those that compared October and November, the data are further clouded. November should be much better because it is part of the traditional holiday shopping season, while October is not. As an example:

Online and other non-store sales were up 2.5 percent seasonally adjusted from October and up 10.5 percent unadjusted year-over-year.

Electronics and appliance stores were up 2.1 percent seasonally adjusted over October and up 7.3 percent year-over-year unadjusted.

The month-over-month numbers are extremely small.

NRF Chief Economist Jack Kleinhenz said:

This has been an impressive start to the holiday season, perhaps the best in the last few years. The combination of job and wage gains, modest inflation and a healthy balance sheet along with elevated consumer confidence has led to solid holiday spending by American households.

The data do not seem to support a case of great strength, so Kleinhenz’s analysis will need to be sufficient.