October’s Retail Sales Growth Left Fashion Out in the Cold

In Fashion

U.S. consumers were out spending in October, and while retail trade sales saw a bump in purchases, shoppers weren’t buying as much at apparel and accessories retailers or at department stores.

U.S. retail sales rose 1.3 percent in October to $694.5 billion, seasonally adjusted, from the previous month, representing the biggest gain since February. Retail trade sales rose 1.2 percent from September 2022. But sales at apparel and accessories stores were essentially flat at $26.391 billion in October from $26.396 billion in September. Sales at department stores fell 2 percent to $11.31 billion from $11.55 billion. Sales at furniture and home furnishings retailers rose 1 percent to $12.11 billion from $11.98 billion. Sales at nonstore retailers, such as online e-tailers, rose 1 percent to $111.51 billion from $110.22 billion.

“Retail sales volumes, factoring out inflation, have been flattish for much of the year despite rebounds in spending on consumer services and rising questions about consumer health,” David Silverman, senior director at credit ratings firm Fitch Ratings, said. “The holiday season, already well underway with the ‘official’ kickoff next week on Black Friday, will likely be characterized by greater markdown activity than last year despite these good trends, given many retailers were overly optimistic about 2022 trends and have excess inventory to clear over the next few months.”

Economists at Wells Fargo Securities said in a report Wednesday that “consumers are struggling to keep up the pace” despite the encouraging spending new. The “last time credit card borrowing was growing like it is now, we were heading into the 2008-2009 recession,” economists Tim Quinlan and Shannon Seery wrote.

They also pointed to a downside to what appears to be sustained strength in retail sales. While fundamentals are not supportive for consumer spending, the retail sales gains continue to show increases. And the staying power of spending provides no incentive to businesses to forgo price increases. That’s a scenario that makes the task of getting inflation in check more difficult for policymakers, they said. In short, the Federal Reserve might decide it’s time for another rate hike to stave off inflation.

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