(Bloomberg)—U.S. retail sales rose in October at the slowest pace in six months, suggesting consumers are becoming more hesitant amid a surging pandemic and lack of fresh federal stimulus.
The value of total sales increased 0.3% from the prior month, when there was a downwardly revised 1.6% gain, Commerce Department figures showed Tuesday. The median estimate in a Bloomberg survey of economists called for a 0.5% increase.
Weaker momentum in consumer spending—which accounts for two-thirds of the economy—indicates growth could slow more sharply following the third quarter’s record jump in gross domestic product. November and December could prove tougher with states and cities reimposing restrictions on indoor dining and nonessential business to contain a rampant coronavirus, while hopes for additional fiscal stimulus this year keep fading and political uncertainty hangs over government policy.
“The fact that the retail sales were a little weaker in October reinforces the idea that if the pandemic gets worse and there’s more shutdowns and restrictions, that the November data, which we haven’t gotten yet, will be even softer,” former Federal Reserve Bank of New York President William Dudley said on Bloomberg Television.
The subdued retail figures followed strong quarterly results earlier Tuesday from two large retailers—Home Depot Inc. and Walmart Inc. Home Depot’s comparable sales jumped 24.1% in the latest quarter from a year ago as the home-improvement retailer benefited from a surge in renovation activity, while Walmart’s sales also climbed more than projected as online demand soared at the world’s largest retailer.
The retail report provides a snapshot of activity in October: eight of the 13 major retail categories decreased, led by clothing and sporting goods and hobby stores. Restaurants and bars recorded the first decline since the initial depths of the pandemic in April, a sign that colder weather is discouraging the outdoor dining that kept many businesses afloat during the summer.
While overall retail sales rose 5.7% from a year earlier, several categories remain well below pre-pandemic levels, including gasoline stations, clothing stores and restaurants.
The data point to spending that’s moderating at the start of the fourth quarter as coronavirus cases rise in every U.S. state, prompting some, including California and New Jersey, to issue new restrictions. Other regions have paused full reopenings. Early trials from companies including Moderna Inc. have shown effective results, though a vaccine must be developed and deployed in scale before consumers feel comfortable enough to regain regular activity.
Nonstore sales jump nearly 27%
U.S. nonstore sales growth slowed in October but still remained at highly elevated levels as this year’s postponed Amazon Prime Day sales event and related online promotions from other retailers gave ecommerce a boost, Commerce Department data shows.
Last month, consumer spending through nonstore channels spiked 26.9% over October 2019, according to a Digital Commerce 360 analysis of the agency’s figures. Numbers exclude estimated fuel sales. That’s the highest year-over-year growth for the month of October since at least 1992—the first year for which the agency published data—and more than 7 percentage points higher than the No. 2 showing, which came in October 2000. The increase in October 2020 is also a significantly higher rate than the 16.2% growth registered in October 2019.
It also marks the third-highest year-over-year jump of any month dating back to 1992, behind June 2020 and an upwardly revised September 2020, which both surpassed 30.0%. The top four monthly year-over-year growth rates ever recorded all fell during 2020, a year marked by seismic shifts in buying behavior as consumers have skipped store visits and shopped online while the coronavirus continues to ravage the country.
The Commerce Department’s nonstore sales—which are mainly online but include other sales such as orders through call centers, catalogs, door-to-door visits and vending machines—don’t align perfectly with spending captured in the pure ecommerce figures that the agency releases quarterly. But the data is an early indicator of trends in the online sector. Digital Commerce 360 analyzes non-seasonally adjusted Commerce Department numbers.
Prime Day boosts October nonstore sales
Amazon.com Inc.’s decision to postpone its popular annual promotional event from July to mid-October this year due to the pandemic pushed the sizable bump in digital revenue from the dog days of summer into Q4, anchoring October’s nonstore performance. During the 48-hour Prime Day sale, consumers purchased $10.40 billion on goods on Amazon.com, up 45.2% from the same sales event in July 2019, Digital Commerce 360 estimates.
Non-Amazon retailers took advantage of the influx of online shopping during Prime Day, with more than half of the top 100 North American ecommerce sites offering competing widespread sales, according to an analysis of site visits conducted by Digital Commerce 360 researchers on Oct. 13. Nearly a quarter—24%—of retail sites also displayed holiday messaging to nudge consumers to start peak season shopping early.
Unsurprisingly, non-Amazon retailers increased U.S. online sales by an average of 71% during Prime Day compared with the July 2019 promotional event, according to data from software provider Salesforce.com Inc. The firm aggregates data from the activity of more than 1 billion global shoppers flowing through its Commerce Cloud platform and extrapolates its clients’ findings to the broader retail industry.
Jessica Young contributed to this report.
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