United States: Retail sales growth leaps in September on hurricane-related reconstruction efforts
October 13, 2017
Retail sales jumped 1.6% from the previous month in September—the largest month-on-month increase since March 2015—as reconstruction activity got underway following Hurricane Harvey. The increase came in slightly below market expectations of a 1.8% increase, but upward revisions to the previous months more than made up for September’s miss. Sales in August are now reported to have declined 0.1% on a monthly basis, instead of the 0.2% drop reported last month.
The noteworthy increase in the headline figure reflected a 3.6% gain over the previous month in sales at auto and auto parts dealers as consumers began replacing hurricane-damaged vehicles. Gasoline sales were also up 5.8% in September, reflecting the spike in prices at the pump following the hurricanes. In addition, sales at building material stores expanded at a healthy 2.1% in the month as rebuilding began in the areas affected by the natural disaster. Core sales, which exclude autos, restaurants, building materials and gasoline, rose a robust 0.4% in September, with sales of groceries and clothing leading the way.
In annual terms, growth in retail sales spiked to 4.4% in September from a revised 3.5% increase in August (previously reported: +3.2% year-on-year). Annual average retail sales growth inched up to 4.2% in September from 4.1% in August, the highest print in over two years.
The effects from Hurricanes Harvey and Irma on core retail sales seem to have been varied. However, with rebuilding efforts well underway, core inflation still subdued and firmer wage growth, household spending is expected to have remained resilient in the third quarter and it is seen accelerating in the last quarter of the year as reconstruction momentum carries over.
Author: David Ampudia, Economist