Retail sales in the US were flat in September, ambiguous data out Friday showed.
Overall, the report painted a mixed picture, which is apt considering the hopelessly indeterminate macro environment.
The unchanged headline compared unfavorably to expectations for a 0.2% rise in nominal sales (figure below). The range of estimates, from more than five-dozen economists, was -1.1% to 0.8%.
August’s headline was revised higher, to 0.4% from 0.3%.
The ex-autos print was a beat, as was the control group, which notched a 0.4% increase. The latter is what matters for growth. Or at least for consumption, which in the US is what drives the economy. An upward revision to the prior month’s control print suggested little room for a “bad news is good news” interpretation of the lackluster headline print.
“On net, it was a good look at spending last month accompanied by solid revisions that should boost GDP estimates,” BMO’s Ian Lyngen said.
A look at the breakdown showed spending rose in six of 13 categories. This time last year, that figure was 12. It was 10 in August. Spending rose at nonstore retailers, general merchandise stores, clothing stores, health and personal care establishments, grocery stores and at restaurants, the only services sector category.
US consumers can expect discounts on a variety of items this holiday season, including electronics and, likely, all manner of home goods and other superfluous inventory which piled up on the balance sheets of the country’s largest retailers during the first half. That could help on the inflation front, but it may also bolster the consumption impulse, which the Fed is attempting to subdue. As long as the rate of nominal sales doesn’t outpace inflation, the Committee will be ok with it, I suppose.
All in all, Friday’s retail sales figures were unlikely to move any needles. Especially coming on the heels of a very uncomfortable CPI report which cemented the case for a fourth straight 75bps Fed hike in November, and materially increased the odds of a fifth at the December gathering.
