US retail sales rebound in September
Retail sales rose 0.6 per cent in September, a rebound after sales slipped 0.2 per cent in August, the Commerce Department said on Friday. During the first nine months of the year, retail sales have increased 2.9 per cent compared with 2015.
Consumers are spending more eagerly as income gains have accelerated and the job market has steadily improved. The increased retail sales have offset the recent weaknesses in manufacturing and the broader struggles in growth worldwide.
Neil Saunders, CEO of Conlumino, said the trend will be of comfort to retailers as it demonstrates momentum as we move into the all-important holiday season, and also suggests consumers have not been deterred from spending by an increasingly acrimonious election campaign.
Stabilising oil prices meant that sales rose 2.4 per cent at petrol stations last month, although sales continue to be down on a yearly basis. Spending at restaurants improved 0.8 per cent in September, while car dealers, building materials stores and furnishers notched monthly gains of 1 per cent or more.
The increase in spending in restaurants, Saunders said, some of it is down to the promotions restaurant players have pushed to stimulate spending, but it is also likely related to the gentle uplifts in consumer incomes which have boosted the amount households have to spend on more discretionary purchases.
Department stores suffered a 0.7 per cent sales decline in September, part of a broader, long-term setback for the anchor tenants at many shopping malls that are now competing with online outlets for customers.
According to Saunders, core retail performed reasonably over September, albeit with a slightly lower growth profile than August which was boosted by a solid back-to-school trading period.
“More modest food inflation also flattened growth as did the continued poor performance of electricals – which failed to be helped by Apple’s new iPhones, something not aided by extremely poor availability across most of the US,” he said.
“In comparison, clothing growth strengthened thanks to fall weather kicking in across large parts of the country, in contrast to last year’s relatively warm spell. That weather also aided home improvement spending as consumers start to prepare their properties for the winter.”
“As ever, the main loser was the department store segment where sales continue to plunge – a sign that they will likely be the main losers in the critical months ahead.”
Consumer spending, which accounts for 70 per cent of economic activity, increased at a 4.3 per cent annual rate in the April-June quarter. That increase fuelled much of the overall annual growth rate of a meagre 1.4 per cent during the second quarter.
Employers added 156,000 jobs in September. Unemployment ticked up to 5 per cent because more people drawn by recent job growth are starting to look for work.
In September, average hourly pay rose 6 cents to $US25.79 and is now 2.6 per cent higher than it was a year ago. The pace of wage growth has strengthened in recent months, with pay rising at only about 2 per cent annually for much of the seven-year recovery from the Great Recession.
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