US re­tail sales re­bounds

Strong auto pur­chases buoy re­tail sales; in­fla­tion stir­ring

Kuwait Times - - BUSINESS -

US re­tail sales re­bounded in Septem­ber amid a surge in mo­tor ve­hi­cle pur­chases and a rise in dis­cre­tionary spend­ing, point­ing to sus­tained do­mes­tic de­mand that re­in­forces ex­pec­ta­tions of an in­ter­est rate in­crease from the Fed­eral Re­serve in De­cem­ber. Other data yes­ter­day sug­gested a pickup in in­fla­tion, with pro­ducer prices ris­ing broadly last month to record their big­gest year-on-year in­crease since De­cem­ber 2014. The re­ports were the lat­est in­di­ca­tion that the econ­omy re­gained mo­men­tum in the third quar­ter af­ter a lack­lus­ter firsthalf per­for­mance.

The Com­merce De­part­ment said re­tail sales in­creased 0.6 per­cent af­ter de­clin­ing 0.2 per­cent in Au­gust. Sales were up 2.7 per­cent from a year ago. Ex­clud­ing au­to­mo­biles, gaso­line, build­ing ma­te­ri­als and food ser­vices, re­tail sales edged up 0.1 per­cent last month, re­vers­ing Au­gust’s 0.1 per­cent drop. These so-called core re­tail sales cor­re­spond most closely with the con­sumer spend­ing com­po­nent of gross do­mes­tic prod­uct.

“We see noth­ing in the broader pic­ture to raise any con­cerns about the health of con­sump­tion in the pe­riod ahead, as we con­tinue to see tight­en­ing la­bor mar­kets and an up­trend in wage gains as sup­port­ing such spend­ing,” said An­thony Kary­dakis, chief eco­nomic strate­gist at Miller Tabak in New York. Econ­o­mists had fore­cast over­all re­tail sales in­creas­ing 0.6 per­cent and core sales ad­vanc­ing 0.4 per­cent last month. Min­utes of the Fed’s Sept. 20-21 pol­icy meet­ing pub­lished on Wed­nes­day showed sev­eral of­fi­cials be­lieved it would be ap­pro­pri­ate to in­crease in­ter­est rates “rel­a­tively soon” if the econ­omy con­tin­ued to gain strength.

The US cen­tral bank raised its bench­mark overnight in­ter­est rate last De­cem­ber and has held it steady since, largely be­cause of con­cerns over low in­fla­tion. But in­fla­tion ap­pears to be ris­ing steadily. In a sep­a­rate re­port, the La­bor De­part­ment said its pro­ducer price in­dex for fi­nal de­mand in­creased 0.3 per­cent last month af­ter be­ing un­changed in Au­gust. In the 12 months through Septem­ber, the PPI jumped 0.7 per­cent, the big­gest in­crease since De­cem­ber 2014. The PPI was flat in the 12 months through Au­gust. A 0.7 per­cent in­crease in the cost of goods, in­clud­ing en­ergy, ac­counted for more than three quar­ters of the rise in fi­nal de­mand prices.

Pro­ducer prices are ris­ing as some of the drag from the dol­lar’s past surge starts to ease. The dol­lar rally ap­pears to have peaked early this year and oil prices hav­ing pushed off multi-decade lows, which econ­o­mists ex­pect could al­low in­fla­tion to grad­u­ally rise to­ward the Fed’s 2 per­cent tar­get. US stock fu­tures pared gains slightly af­ter the data. The dol­lar held gains, while US Trea­suries trimmed losses. The At­lanta Fed is cur­rently fore­cast­ing the econ­omy grow­ing at a 2.1 per­cent an­nu­al­ized rate in the third quar­ter af­ter a 1.4 per­cent ex­pan­sion pace in the sec­ond quar­ter.

Auto sales rose 1.1 per­cent last month af­ter slip­ping 0.3 per­cent in Au­gust. Re­tail sales were also boosted by re­ceipts at ser­vice sta­tions, which jumped 2.4 per­cent as gaso­line prices in­creased. Sales at on­line re­tail­ers rose 0.3 per­cent. De­spite core re­tail sales ris­ing mod­estly last month, house­holds are boost­ing dis­cre­tionary spend­ing. Sales at restau­rants and bars ad­vanced 0.8 per­cent, the largest gain since Fe­bru­ary, and re­ceipts at sport­ing goods and hobby stores surged 1.4 per­cent. There were also strong in­creases in sales at fur­ni­ture and build­ing ma­te­rial stores. But sales at elec­tron­ics and ap­pli­ance out­lets fell 0.9 per­cent and re­ceipts at cloth­ing stores were flat.

— AP

OHIO: Me­gan John­son counts money from a sale at Cha­grin Hard­ware in Cha­grin Falls, Ohio. Yes­ter­day, the Com­merce De­part­ment re­leased US re­tail sales data for Septem­ber.

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