US Retail Sales Showcase Ongoing Resilience of Economy’s Engine

(Bloomberg) -- US retail sales strengthened in September by more than forecast in a broad advance, illustrating resilient consumer spending that continues to power the economy. Most Read from Bloomberg Inside the ‘Utopias’ of Mexico City One City’s Plan to Re-Link a Neighborhood That Robert Moses Divided How Mexico City Averted All-Out Drought Chicago Should Consider Furloughs, Higher Booze Tax, Watchdog Says Mexico Seeks to Halve Permitting Time to Attract More Factories The value of retail purchases, unadjusted for inflation, increased 0.4% after a 0.1% gain in August, Commerce Department data showed Thursday. Excluding autos and gasoline stations, sales climbed 0.7%. Ten of the report’s 13 categories posted increases, led by miscellaneous store retailers, which include florists and pet stores. Apparel and grocery stores also posted solid advances.

Receipts at gasoline service stations decreased, reflecting cheaper prices at the pump. Auto sales barely rose, defying expectations for a strong increase. The sales figures cap another likely quarter of solid economic growth and consumer demand fueled by a hardy labor market. While the retail report does little to reverse expectations the Federal Reserve will cut interest rates by 25 basis points next month, it adds to evidence that the economy shows scant signs so far of materially down shifting. Treasury yields, stock futures and the dollar were higher after the report.

The data showed so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — surged 0.7% in September, the strongest in three months. The measure excludes food services, auto dealers, building materials stores and gasoline stations. Control-group sales increased at a robust 6.4% annualized pace in the three months ended in September, the strongest since early 2023. Before the report, the Atlanta Fed’s GDPNow forecast penciled in a 3.3% annualized increase in personal consumption for the third quarter. Figures issued late last month by the Bureau of Economic Analysis showed wages and salaries, unadjusted for price changes, increased 0.5% in August — the most in three months and suggesting consumers have the wherewithal to spend.

And job growth in September was the strongest in six months, with employers adding more than a quarter million jobs. However, research from Fed economists suggests that the consumers powering US economic growth are increasingly those who are higher up the income ladder, and likely enjoying a wealth effect from asset-price gains. Story continues Not only are the retail figures unadjusted for price changes, they also largely reflect purchases of goods, which comprise a relatively narrow share of overall consumer outlays. Data later this month will provide more details on September inflation-adjusted spending on goods and services. Spending at restaurants and bars, the only service-sector category in the retail report, increased 1% last month, the most in nearly a year.

Separate data Thursday showed applications for US unemployment benefits unexpectedly fell after jumping the previous week in Southeastern states affected by Hurricane Helene. --With assistance from Chris Middleton. (Adds graphic, jobless claims) Most Read from Bloomberg Businessweek BYD Is Winning the Global Race to Make Cheaper EVs A Fentanyl Vaccine Is a Long Shot That Just Might Work How Starbucks Became a Sugary Teen Emporium The World’s Central Banks Aren’t Following the Fed’s Lead Anymore Why OpenAI Is at War With an Obscure Idea Man ©2024 Bloomberg L.P. View comments