Surging Car Sales Spark Upside Surprise For Retail Spending In November

BofA’s omniscient forecasters were – for a change – more or less in line with consensus for retail sales in November…

The actual print was mixed with the headline retail sales rising 0.7% MoM (hotter than expected), while core retail sales disappointed. The headline beat pushed sales up 3.8% YoY – the highest since Dec 2023…

Source: Bloomberg

Motor Vehicle & Parts were the biggest driver of the upside surprise…

Sales were also helped by online retailers…

Motor Vehicle & Parts Dealers sales surged for the second month to a new record high…

The key ‘Control Group’ saw sales rise 0.4% MoM (as expected) providing support for GDP…

Source: Bloomberg

BofA notes that the robust spending that we saw around Thanksgiving continued through Cyber Monday week.

We can’t learn much from year-over-year growth rates, since they were heavily impacted by the calendar shift. Therefore, we compare spending to the analogous period in 2023.

We find that spending on holiday items in the two weeks ending Dec 7 in 2024 was 6.1% higher than in the two weeks ending the Saturday after Cyber Monday in 2023.

Finally, as a reminder, retail sales data is ‘nominal’ so a quick sleight of hand using CPI data as a rough indication of inflation and we see that in fact, real retail sales have basically oscillated around the flatline for the last 30-months-plus…

Source: Bloomberg

So another data point for The Fed that clearly signals no need for rate-cuts! Does this look like an economy dealing with ‘restrictive’ rates?