U.S. retail sales edge up in November

*U.S. retail sales rose 0.3% m/m in November, substantially below consensus (0.8%), following an upwardly revised 1.8% m/m increase in October that lifted the yr/yr increase to 18.2% (Chart 1). Headline sales were depressed by a 5.5% m/m decline in sales at department stores and a 4.6% m/m decline in electronic and appliance store sales, while sales at motor vehicle and parts dealers ticked down 0.1% m/m. Despite the deceleration in retail sales growth, retail sales are 23% higher than in February 2020. Sustained employment growth, nominal wage gains, and healthy household balance sheets should support continued retail sales growth through the holiday retail season.

*Control retail sales (excluding autos, building supplies, and gas stations), which are calculated directly in GDP, edged down 0.1% m/m (consensus: 0.7%), although its October rise was revised up to 1.8% m/m (Chart 2). Despite November’s decline, control group retail sales have risen 7.7% on a three-month annualized basis and point to healthy consumption growth in Q4.

*November’s retail sales report provides tentative evidence that the mix of elevated and pervasive price increases paired with ongoing supply constraints may have begun to weigh on consumer demand, with real retail sales declining 0.5% m/m (Chart 3). It is also likely that some consumers began their holiday shopping earlier than normal this year, reflected in strong m/m retail sales growth at departments stores (2.5%), electronics and appliance stores (3.1%), and non-store retailers (4.1%) in October.

*Sales at food services and drinking places continued to recover, rising 1.0% m/m, their ninth consecutive monthly increase and lifting their yr/yr increase to a striking 37.4% (Chart 4). Sales at food services and drinking places are 11.3% higher than in February 2020 and continued increases bode well for employment in the sector, which remains 750k below its pre-pandemic level despite the marked rise in sales. However, given the emergence of the omicron variant a resurgence in public health concerns that keeps people away from high contact, in-person activities could impair the recovery in the leisure and hospitality sector.

*The decline in motor vehicle and parts dealers sales (-0.1 % m/m) reflects continued supply chain bottlenecks and semiconductor shortages that have disrupted auto manufacturing, and sales are likely to rise as auto production ramps up when supply constraints ease. Rising energy commodity and fuel prices contributed to a 1.7% m/m increase in gasoline station retail sales, which have risen 52.3% over the last year (Chart 5).

Chart 1. Retail Sales

Chart, line chart Description automatically generated

Chart 2. Control Group Retail Sales (ex. Autos, Building Supplies, Gas Stations)

Chart, line chart Description automatically generated

Chart 3. Real Retail Sales
Chart, line chart Description automatically generated

Chart 4. Retail Sales – Food Services and Drinking Places
Chart, line chart Description automatically generated

Chart 5. Retail Sales – Motor Vehicle and Dealers & Gas Stations

Chart, line chart Description automatically generated

Mickey Levy, mickey.levy@berenberg-us.com

Mahmoud Abu Ghzalah, mahmoud.abughzalah@berenberg-us.com

Remarks regarding foreign investors. The preparation of this document is subject to regulation by US law. The distribution of this document in other jurisdictions may be restricted by law, and persons, into whose possession this document comes, should inform themselves about, and observe, any such restrictions. United Kingdom This document is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers. Copyright BCM is a wholly owned subsidiary of Joh. Berenberg, Gossler & Co. KG (“Berenberg Bank”). BCM reserves all the rights in this document. No part of the document or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without the BCM’s prior written consent. Berenberg Bank may distribute this commentary on a third party basis to its customers.

Member FINRA & SIPC

This email and any files or attachments transmitted with it may contain confidential or privileged information and are intended solely for the use of the intended recipient. If you are not the intended recipient, please do not copy, retain, disclose or use any part of the message or its attachments. Please notify the sender immediately by return email and destroy or delete any copies. Dissemination or use of this information by anyone other than the intended recipient is unauthorized and may be illegal. Communications by email cannot be guaranteed to be secure or error-free. Emails and their attachments are subject to being intercepted, becoming corrupted, getting lost or delayed, or may contain viruses. Therefore, neither the sender nor Berenberg Capital Markets LLC (BCM) accepts any liability for any errors or omissions in the content of this message or problems in its transmission, including those arising as a result of its transmission over the internet.

BCM does not assume liability for the correctness and completeness of all information given and/or attachments contained herein. The provided information has not been checked by a third party, especially an independent auditing firm. BCM explicitly points to the stated date of preparation. The information given can become incorrect due to passage of time and/or as a result of legal, political, economic or other changes. BCM does not assume responsibility to indicate such changes and/or to publish an updated document. Any document(s) or attachment(s) is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers.

In light of upcoming regulatory changes, please be informed that BCM will continue to share information with you until unsubscribe@berenberg-us.com receives your termination/deletion request. For more information about the General Data Protection Regulation (GDPR) and our privacy policies please refer to https://www.berenberg-us.com/legal-notice. BCM reserves all the rights in this communication. No part of this communication or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without BCMâs prior written consent.

The information contained herein and sourced may have been adopted from various news sources, for example, Bloomberg, Reuters, Street Account and various other sources. BCM does not claim accuracy, completeness, timeliness, suitability, or otherwise regarding all the information on the securities, stock markets, or developments referred to within. On no account should the Content be regarded as a substitute for the recipient procuring information for himself/herself or exercising his/her own judgments. BCM is not responsible for any recipient(s) use of this information. This Content is not a solicitation or an offer to buy or sell any of the securities contained herein. This information does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of clients. Clients should consider whether any advice or recommendation in this Content is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of securities which may be referred to in this Content and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain securities.