United States Retail September 2018

United States

United States: Retail sales growth remains subdued in September

October 15, 2018

Retail sales expanded 0.1% on a seasonally-adjusted month-on-month basis in September, matching August’s seven-month low but undershooting market analysts’ expectations of 0.6% for the second consecutive month. This signals that private consumption dynamics are likely starting to soften in the third quarter after recording strong growth in Q2, although near record-high consumer confidence in September indicates that domestic spending should remain robust heading into the holiday season.

The report from the Department of Commerce showed the September print was mostly weighed down by a 0.8% contraction in gasoline station sales (August: +1.1% month-on-month), as well as a 1.8% decline in spending at food services and drinking places. (August: +0.3% mom). Sales also contracted for health and personal care stores. On the other hand, food and beverage stores; furniture stores; motor vehicles and parts dealers; sporting goods, hobby, musical instruments and book stores; and clothing stores all saw their sales rebound from the contractions logged in August. The recoveries in furniture, and motor vehicles and parts sales were particularly strong. Lastly, sales growth accelerated for electronics and appliance stores, general merchandise stores, and non-store retailers—a rapidly-growing category which includes e-commerce businesses such as Amazon.

Excluding automobiles and gas, retail sales were flat in September, down from August’s revised 0.1% increase (previously reported: +0.2% mom) and below market expectations of 0.4% growth.

In annual terms, growth in retail sales slowed notably from a revised 6.5% in August (previously reported: +6.6% year-on-year), to 4.7% in September. Annual average retail sales growth inched down to 5.4% in September from 5.5% in August.

Overall, the September data seems to indicate waning momentum for private consumption growth amid growing, most trade-related, headwinds. Despite the welcomed rebound in September, motor vehicle sales remain a key source of concern, given their status as a major durable consumer goods staple. Indeed, on a quarter-on-quarter basis, motor vehicles and parts sales increased just 0.1% in the third quarter in seasonally-adjusted terms. Although the exceptionally tight labor market will likely continue to support consumer spending in coming months, ongoing rate hikes from the Federal Reserve should significantly dampen the momentum over time, given the elevated level of U.S. consumer debt. In addition, the latest round of tariffs imposed by the Trump administration on USD 200 billion of Chinese imports will likely weigh on private spending dynamics in the near- to medium-term—particularly as the tariff rate is set to increase from 10% to 25% on 1 January 2019.

FocusEconomics Consensus Forecast panelists expect private consumption to grow 2.4% in 2019, which is unchanged from last month’s forecast. For 2020, the panel sees private consumption increasing 2.0%.


Author:, Economist

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USA Retail September 2018

Note: Month-on-month and year-on-year variation of nominal retail sales in %.
Source: United States Commerce Department.


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