Dampened retail sales for October suggest that the Federal Reserve’s fight against inflation may have made its first dent in consumers' appetites.

Retail and food services sales fell 0.1% from the previous month, according to US Census Bureau data published Nov. 15. The decline was not quite as substantial as economists had anticipated, as the consensus called for a decline of 0.3% for the month, according to data compiled by Econoday.

While no retailers filed for bankruptcy through the month ended Nov. 15, according to S&P Global Market Intelligence data, the median default risk for retailers rose.

Retail sales

The advance estimate for US retail and food services sales in October totaled $705 billion, down slightly from a revised $705.7 billion in September, according to Census Bureau data. Sales for October increased 2.5% year over year, while total sales for the August to October time frame rose 3.1% from the year-ago period.

Sales at furniture and home furnishing stores slumped the most, falling 2% in October. Miscellaneous store retailers' sales decreased 1.7% for the month, following a 3% rise in September. Department stores had a 1.2% drop in sales.

Among the major retail categories, only health and personal care stores had sales growth of more than 1%, with a 1.1% increase in October.

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On an annual basis, furniture and home furnishing store sales were down the most at 11.8%, followed by a 7.5% decline in sales at gasoline stations and a 5.6% drop at building material and garden equipment dealers.

Bankruptcies

No retailers filed for bankruptcy over the month ended Nov. 15, marking the first monthlong period so far in 2023 without a retail bankruptcy.

Through mid-November, 25 retailers have sought bankruptcy protection in 2023, below the number of year-to-date filings from 2015 to 2020 but above the prior two years' totals.

Default risk

Measured across all retail categories, median default risk was 2.8% as of Nov. 15, up from 2.6% in mid-October, according to Market Intelligence's Market Signal Probability of Default model.

Drug retail had the greatest rise in default risk, which grew to 10.5% by mid-November from 8.6% a month earlier, while the default risk among home furnishing retailers rose to 3.9% from 3.3%. Most other retail industries' default risk climbed over the same time frame as well.

Only the category encompassing other specialty retail, as well as the computer and electronics retail category, recorded declines in default risk, dropping to 4% from 4.6% and to 3.3% from 3.5%, respectively.

Scores produced by the model represent the odds of default within a year and are based primarily on the volatility of share prices for public companies in the sector, accounting for country- and industry-related risks.