NRF Ups Holiday Spending Forecast Despite Modest November Sales

New York—U.S. monthly retail sales rose slightly in November, hampered by rising inflation and supply chain issues despite an early start to holiday shopping.
 
Sales were up 0.3 percent month-over-month in November to $639.8 billion, according to data from the U.S. Department of Commerce released Wednesday, while year-over-year sales were up 18 percent.

The results fell short of analyst expectations of a month-over-month increase of 0.8 percent.
 
October sales were slightly stronger than previously thought, up 1.8 percent month-over-month rather than the previously reported 1.7 percent, as per the revised figures.

Despite the modest growth, the National Retail Federation said in releasing its own November sales figures Wednesday that it remains firm in its forecast for “record spending” for the holiday season.

The NRF expects holiday sales to grow as much as 11.5 percent year-over-year, exceeding its previous estimates of growth between 8.5 and 10.5 percent.

“Even at the low end of the range, both the amount spent and the growth rate would set new records,” said the NRF.

Though there have been month-over-month declines, sales have grown year-over-year every month since June 2020, said the NRF, citing U.S. Census data.

“We expect demand will remain strong through December, even though consumers started holiday shopping earlier than ever this year,” NRF President and CEO Matthew Shay said in a press release.

Last year, the NRF encouraged shoppers to start checking off their holiday gift lists early, and the push for early shopping has continued this year, particularly given the supply constraints.

Early shopping aside, the NRF defines the holiday season as Nov. 1 through Dec. 31, meaning November’s results mark the completion of the first half of the season.
 
“Despite the rise of the Omicron variant, increased vaccination rates combined with retailers’ ongoing safety protocols and procedures have resulted in consumers who feel they can continue to shop safely and conveniently,” Shay said.

The continued spending is due in part to consumers’ healthy financial condition, said NRF Chief Economist Jack Kleinhenz, which has not been disrupted even with inflation and rising COVID-19 cases.

“Recent labor market progress has helped propel incredibly strong demand, and most shoppers have the income and savings to absorb higher prices driven by the pandemic and supply chain disruptions,” he said.
 
As was the case last month, how customers said they felt didn’t quite match up with their shopping behaviors.
 
Consumer confidence fell in November as inflation pushed prices higher, marking the fourth decline in the past five months, and its lowest level in nine months.

The consumer price index, which measures the average change in prices over time that consumers will pay for a basket of goods and services, rose nearly 1 percent month-over-month in November and about 7 percent year-over-year, with inflation rising at its fastest rate since 1982.

Gas prices were up 58 percent year-over-year, while food costs climbed 6 percent.
 
The NRF’s November results, which exclude auto sales, gas stations, and restaurants, show retail sales were unchanged from October, but up 15 percent unadjusted year-over-year.

“While seasonally adjusted numbers may make the results look modest, seasonal patterns have been significantly disrupted by the pandemic and unadjusted data shows November’s sales as calculated by NRF were actually the highest on record,” said Kleinhenz.
 
For the first 11 months of the year, sales were up 14.2 percent over the same period in 2020.
 
The results are in line with the NRF’s revised forecast that 2021 retail sales will grow between 10.5 and 13.5 percent over 2020 to between $4.44 trillion and $4.56 trillion.

November sales were up in all but three categories— furniture and home furnishing stores; online and other non-store sales; and health and personal care stores—on a monthly basis.
 
Year-over-year, sales were up across the board, led by increased sales at clothing, sporting goods, and furniture stores.