US retail sales volumes drop unexpectedly in September
Americans parked their urge to buy last month splashing out less on both automobiles and at gasoline stations.
According to the US Department of Commerce, in seasonally adjusted terms, the volume of US retail sales shrank at a month-on-month pace of 0.3% in September to reach $525.56bn (consensus: 0.3%).
Sales of automobiles and parts were especially weak, falling by 0.9%, alongside a drop of 0.7% in those at gasoline stations and a decline of 1.0% in sales of building materials and supplies.
Fashion retailers on the other hand reported a jump of 1.3% in their sales.
Versus a year ago, total retail sales volumes increased by 4.1%.
To take note of, retail sales figures for July were marked up to reveal a rise of 0.6% on the month, instead of the preliminary reading of 0.4%.
Just-released retail sales data for September came below consensus expectations.
— Mohamed A. El-Erian (@elerianm) October 16, 2019
0.3% fall, compared to the expected 0.3% increase, will raise concerns about the strength of household consumption--the engine of growth that has allowed the economy to overcome headwinds from abroad
Commenting on Wednesday's figures on retail sales, Ian Shepherdson, chief economist at Pantheon Macroeconomics, described them as "soft" but said the weak prints on car sales as well as for merchandise and department store sales were hard to square with recent readings on auto unit sales and the closely-followed weekly Redbook chainstore sales surveys.
Indeed, the latter had suggested an acceleration in the pace of spending as Americans tried to front-run the latest trade tariffs that had been due to kick-in.
Hence, said Shepherdson, the retail sales numbers are biased to the downside at the initial print; upward revisions are more common than downward, and today’s numbers look prime candidates to be moved higher.
Furthermore, he explained, the so-called 'control measure' for retail sales - which excludes those at gasoline stations and of building materials and which feed into GDP data - had risen at a "very respectable" annualised rate of 6.9% over the course of the third quarter.
That was down from the 7.9% "leap" recorded over the prior three-month stretch but in any case could not be sustained because nominal income growth after tax was running at 4.5%, leading the economists to tell clients that "the fourth quarter, therefore, likely will see a further slowdown in sales growth".