Retail Sales Remain Strong in October 2010

Advanced retail sales data for October 2010 showed continued strength.  The headlines:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $373.1 billion, an increase of 1.2 percent (±0.5%) from the previous month, and 7.3 percent (±0.7%) above October 2009. Total sales for the August through October 2010 period were up 6.3 percent (±0.5%) from the same period a year ago. The August to September 2010 percent change was revised from +0.6 percent (±0.5%) to +0.7 percent (±0.3%).

Retail trade sales were up 1.3 percent (±0.5%) from September 2010, and 7.7 percent (±0.7%) above last year. Auto and other motor vehicle dealers sales were up 14.7 percent (±2.5%) from October 2009 and nonstore retailers sales were up 13.5 percent (±3.1%) from last year.

The advance estimates are based on a subsample of the Census Bureau’s full retail and food services sample. A stratified random sampling method is used to select approximately 5,000 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms. Responding firms account for approximately 65% of the MARTS dollar volume estimate.

Econintersect  uses unadjusted data to evaluate this data.  All seasonal adjustment methodology is suspect because of poor data during the Great Recession – and any percentage increase (or decrease) of sales is suspect.  Government agencies are incapable of doing out-of-the-box analysis as they must use a set quantitative method to derive changes in sales.   However, Econintersect agrees that October 2010 retail sales is likely up.

As can be seen in the above chart, September 2010 was an outstanding retail sales month – and in comparison October is weaker.

But the real question to be asked is if October is showing signs of weakness – and that answer is a resounding NO.  The YoY increase in October 2010 is well above the six year average for October (5.14% in October 2010 to the six year average of 3.48%).  Further, the six year average increase MoM between September and October is $7.023 billion – and the increase between September 2010 and October 2010 was $7.841 billion.

Getting away from the quantitative analysis, there is a stated objective of the retail sector to push forward Christmas sales.  This begs the question whether December retail sales will suffer.   However, the fact remains that October sales are strong – for what ever reason – and there is no indication in this data of an oncoming recession.