September Retail Sales

Consumers increased their retail spending by 1.1 percent in September per the Census Bureau.  Not only was the spending faster than consensus expectations, but August’s data was revised higher from 0.9 percent to 1.2 percent.  Even after extracting the 2.5 percent increase of dollars spent on gasoline, retail receipts climbed.

One of the criticisms of August’s figure was that the sharp increase in gas prices was the primary driver of the added spending.  September’s number is much more broadly based.  For instance, motor vehicle sales improved 1.3 percent.  Furthermore, the total retail sales figure less gasoline and autos still managed to increase by 0.9 percent versus this subcategory’s upwardly revised print of 0.3 percent in August.  Electronics & appliance stores experienced a 4.5 percent monthly surge in sales.  It is likely that a certain company’s updated cell phone release impacted this number substantially.  To put this subcategory’s monthly improvement in perspective, the electronic & appliance month-over-month improvement was better than its year-over-year increase of 3.6 percent.  Building materials ticked up 1.1 percent and consumers spent 1.2 percent more at food and beverage stores.

Retail sales make up roughly one-third of the money spent by U.S. consumers, so the broad based improvement is encouraging.  Of course this indicator does not include adjustments for inflation, so some of the increase in spending will have come from price increases.  The latest figures on inflation have not been alarmingly high, so there is real improvement in economic activity being expressed by this month’s retail sales report.  Americans are buying more widgets.    (by C. Cox)