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December retail market: Retail sales grow less than expected, employment rises


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December retail market: Retail sales grow less than expected, employment rises

U.S. retail sales advanced less than expected in November, pointing to a slowdown in consumer spending likely influenced by a shortened holiday season, industry watchers said.

Meanwhile, employment in the sector slightly rose during the month as no retailers filed for bankruptcy during the late November through early December period, according to an analysis by S&P Global Market Intelligence.

Retail sales

U.S. retail and food services sales increased over the previous month by 0.2% on a seasonally adjusted basis to $527.99 billion in November, according to a U.S. Census Bureau report released Dec. 13.

The increase fell short of the 0.5% increase consensus estimate of economists polled by Econoday.

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The slower-than-expected sales growth prompted mixed reactions from industry watchers.

Robert Frick, corporate economist at Navy Federal Credit Union, said in a note that the sales "point to more consumer caution."

"Americans are saving more and managing debt more aggressively, perhaps mindful of the next recession, though one is not predicted for next year," Frick said. However, the retail sales show "consumers are still spending, and spending enough to support the expansion."

The U.S. Federal Reserve on Dec. 11 kept its benchmark interest rate steady and signaled that it may hold rates through 2020.

"Just as the Fed was in the middle of a victory dance, convinced they have returned the economy to a position of strength after just three rate cuts, the consumer waves a red flag," Lindsey Piegza, chief economist at Stifel, said, commenting on the retail sales.

Piegza said any indication that the consumer is waning "could have sizably negative consequences for growth at year-end and into next year," as the consumer remains the primary engine of the economy.

"One report doesn’t tell the whole story, but an ongoing trend of slower spending could have the Fed rethinking additional stimulus," Piegza added.

But retailers are also facing a shorter holiday season this year due to a late Thanksgiving, viewed as the unofficial start to the shopping season. Jack Kleinhenz, chief economist at the National Retail Federation, said in a statement that the November figures are more "about the calendar than consumer confidence."

"November showed modest growth on the surface, but you have to remember that the late timing of Thanksgiving delayed the beginning of the busiest portion of the holiday season and pushed Cyber Monday’s billions of dollars of retail sales into December," Kleinhenz said, adding that consumer spending has been solid.

"With strong employment and higher wages, we’re on track for a strong holiday season," Kleinhenz said.

While retail sales figures were softer than expected in November, it is "premature to draw much from the retail sales figures until we see the December release" because of the shortened holiday season, Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a research note.

Nonstore sales, the category that includes e-commerce, rose 0.8% to $68.08 billion. During Thanksgiving weekend and through Cyber Monday, retailers saw a record number of shoppers as consumers made more purchases online.

Electronics and appliance stores registered a sales increase of 0.7%. Sales in the category reached $8.17 billion for the month.

Spending at health and personal care stores declined 1.1% to $29.44 billion. Clothing and clothing accessories stores saw a 0.6% decline in sales to $22.24 billion.

Meanwhile, the consumer price index, or CPI, rose 0.3% in November from the month prior, according to a monthly report released Dec. 11 by the U.S. Bureau of Labor Statistics. Prices increased by 2.1% year on year.

The core CPI, which excludes food and energy prices, rose 0.2% during the month. Energy prices increased by 0.8%, while food prices jumped 0.1%.

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Apparel prices increased by 0.1% in November versus the previous month. Prices for men's and boys' apparel decreased 2.5% month over month, while prices for women's and girls' apparel increased by 1.3%.

Footwear prices increased by 0.5%, while prices of jewelry and watches rose by 1.7% in November.


The retail sector added 2,000 jobs in November, a 0.01% month-over-month increase to 15.8 million jobs, according to a Dec. 6 monthly report from the U.S. Bureau of Labor Statistics.

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General merchandise stores gained the largest percentage of jobs. Jobs in the sector increased by 21,900, or 0.72% month over month, to 3.1 million jobs for November.

Motor vehicle and parts dealers added 7,900 jobs during the month, up 0.38% from October to 2.1 million jobs. Employment at food and beverage stores increased by 2,900 jobs, a 0.09% increase from October to 3.1 million jobs.

Clothing and clothing accessories stores registered a decline of 1.37% or 17,800 jobs during the month to 1.3 million jobs.

Jobs at miscellaneous store retailers declined by 2,000, or 0.24% month over month, to 821,000 jobs.

Nonstore retailers shed 100 jobs during November, down 0.02% to 570,500 jobs in total.


There were no bankruptcies during the late November through early December period. The bankruptcy count for 2019 continues to stand at 31.

The total includes companies with a primary industry classification of retailing, household and personal products, or consumer durables and apparel, and a secondary classification of retailing. Public companies included in the list of companies with public debt must have at least $2 million in either assets or liabilities at the time of the bankruptcy filing, while private companies must include at least $10 million.

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A December analysis of the one-year probability of default scores identified 15 U.S. department stores and apparel companies with scores ranging from 13.1% to 2.4% and corresponding implied credit scores of "ccc+" to "b+."

Several retailers shifted positions as the calculated one-year probability of default changed for most of the companies on the list.

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Christopher & Banks Corp. continued to top the list, but the specialty retailer's one-year probability of default declined to 13.1% from 13.9% in November.

Women's fashion apparel retailer RTW Retailwinds Inc. moved to the No. 2 spot as its one-year probability of default rose to 10% from 8.9% in the prior month.

Specialty apparel retailer Tailored Brands Inc., which holds the No. 6 spot now, saw its probability of default increase to 8.3%, up from 5% in November.

Centric Brands Inc. fell to the No. 10 spot as its one-year probability of default decreased to 5.9% from 8.5%.

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S&P Global's Fundamental Probability of Default Model provides a fundamentals-based view of credit risk for corporations by assessing both business risk — including country risk, industry risk, macroeconomic risk, company competitiveness and company management — as well as financial risk, such as liquidity, profitability, efficiency, debt service capacity and leverage. For a more thorough review of the model, see the PD Model Fundamentals - Public Corporates whitepaper.