US retail sales pick up pace in September

Retail sales in the United States accelerated in September, according to government data released Thursday, a positive sign for consumption as the election approaches.

Overall sales rose 0.4 percent to $714.4 billion between August and September, according to Commerce Department data, beating analysts’ expectations.

In August, sales edged up just 0.1 percent to $711.3 billion.

Excluding auto and gas station sales, the overall monthly rise would have been even higher at 0.7 percent in September, the report added.

While the US central bank had kept interest rates high for a large part of the year — raising the cost of borrowing for households and businesses to tamp down inflation — consumer spending has been more robust than expected.

Households have been drawing down on savings from the Covid-19 pandemic period, and the economy could be given a further boost with the Federal Reserve starting to lower rates more recently.

Compared with the same month a year ago, retail sales were up 1.7 percent in September.

“The details of the report were encouraging, with spending on food services and a range of retailers contributing,” said Michael Pearce, deputy chief US economist at Oxford Economics in a statement.

He added that a resilient jobs market, strong household balance sheets and declining interest rates point to consumption growth hovering close to three percent in 2025.

But he warned that “the impact of Hurricanes Helene and Milton, together with large sales at online retailers Amazon and Walmart will make the October report particularly noisy.”

Growth could slow however in the coming quarters with the rise in labor income cooling, credit conditions tight and as households have exhausted excess savings, Pantheon Macroeconomics cautioned in a separate report.

For September, Pantheon analysts added that “Hurricane Helene probably landed too late in the month” to have an impact on the sales figures, “and was too localized to have a major impact on national sales.”

Source: AFP