September Retail Sales Rise Despite Consumer Caution
Lower-Income Shoppers Pull Back as Inflation Pressures Build
Key Takeaways:
- U.S. retail sales rose 0.2% in September after a delayed release caused by the government shutdown, with core sales up 0.1%.
- The data show slowing consumer momentum as rising prices and a softening job market strain lower-income shoppers while wealthier households sustain overall spending.
- Control-group sales fell 0.1% and the Census Bureau said the timing of the next report is uncertain as markets await additional inflation and confidence data.
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U.S. retail sales rose modestly in September, suggesting some consumers hit pause after several months of robust spending.
The value of retail purchases, not adjusted for inflation, increased 0.2% after a 0.6% gain in August, Commerce Department data showed Nov. 25, after being delayed due to the government shutdown. Excluding cars and gas, sales rose just 0.1%.
Eight out of 13 categories posted increases, fueled by spending at gasoline stations, personal care stores and miscellaneous retailers. Motor vehicle sales fell for the first time in four months. Outlays on electronics, clothing and sporting goods also declined.
Consumers lost some momentum at the end of an otherwise solid third quarter. While overall outlays have beenÌýbuoyedÌýby wealthier shoppers benefiting from a strong stock market, lower-income consumers are showing signs of strain. Rising prices and a softening job market have fueled caution among many shoppers and helped push consumer sentimentÌýnear a record low.
That income divide has been top of mind for officials at the Federal Reserve, where there’s aÌýnotable splitÌýamong policymakers about whether to lower interest rates again at their meeting next month. Traders continue to see the odds of a December rate cut as more likely than not.
Amid widespread concerns about affordability, retailers like Walmart Inc. andÌýTJX Cos.Ìý— which runs both TJ Maxx and Marshalls — have flagged shoppers are in search ofÌýbargains. AndÌýºÚÁϳԹÏÍø Depot Inc.Ìýwarned many consumers are holding off on big-ticket home purchases.
Walmart ranks No. 1 on the Transport Topics Top 100 list of the largest private carriers in North America. ºÚÁϳԹÏÍø Depot ranks No. 54.
Looking ahead,Ìýover halfÌýof Americans say they expect to spend at least the same amount as they did last year this holiday season, according to credit reporting firm TransUnion. Part of that likely reflects higher prices though, as tariffs force some companies toÌýcut backÌýon Black Friday deals.
Consumers continued to dine out in September. Spending at restaurants and bars, the only service-sector category in the retail report, advanced 0.7%, extending gains.
The retail sales report showed so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — fell 0.1% in September, declining for the first time in five months. The measure excludes food services, auto dealers, building materials stores and gasoline stations.
Delayed Reports
The September retail report was originally due on Oct. 16 but delayed due to the government shutdown. The Census Bureau said Nov. 25 that the date of the next release is yet to be determined.
Another belated report Nov. 25 showed prices paid to US producers rose 0.3% in September, reflecting higher energy and food costs. The Conference Board’s measure of consumer confidence for November is due later this morning.
RELATED: PPI Climbs in September as Gasoline Costs Surge
Since the retail data aren’t adjusted for inflation, a gain in spending could reflect the impact of higher prices rather than stronger demand. Also, the figures largely reflect purchases of goods, which comprise roughly a third of overall household spending. A fuller look at inflation-adjusted spending on goods and services is due Dec. 5.
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