NEW YORK: US 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 Tuesday, after being delayed due to the government shutdown.
Excluding cars and petrol, sales rose just 0.1%.
Eight out of 13 categories posted increases, fuelled by spending at petrol 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 been buoyed by wealthier shoppers benefiting from a strong stock market, lower-income consumers are showing signs of strain.
Rising prices and a softening job market have fuelled caution among many shoppers and helped push consumer sentiment near a record low.
That income divide has been top of mind for officials at the Federal Reserve, where there’s a notable split among 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 and TJX Cos – which runs both TJ Maxx and Marshalls – have flagged shoppers are in search of bargains.
Home Depot Inc warned many consumers are holding off on big-ticket home purchases, and Target Corp saw weakness in apparel and home goods.
Still, there are pockets of consumer strength. Kohl’s Corp, Abercrombie & Fitch Co and Best Buy Co all upgraded their outlooks for the remainder of the year.
The results suggest shoppers are still willing to spend on innovation, like the new iPhone, and on brands they trust.
Over half of 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 to cut back on 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.
The September retail report was originally due on Oct 16 but delayed due to the government shutdown.
The Census Bureau said the date of the next release is yet to be determined.
Another belated report Tuesday 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.
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. —Bloomberg
