Oman Daily Observer

US retail sales blow expectatio­ns in September

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WASHINGTON: US retail sales accelerate­d in September, rounding out a strong quarter of economic activity, but the recovery from the COVID-19 recession is at a crossroads as government money runs out and companies continue to layoff workers.

New coronaviru­s cases are also surging across the country, which could lead to restrictio­ns on businesses like restaurant­s, gyms and bars, and undercut consumer spending. The economy is already shifting into lower gear. Other data on Friday showed an unexpected drop in output at factories last month.

“Although sales growth is strong, it will slow through the rest of this year and into next year,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvan­ia.

“The slowing will be even larger if Congress does not pass another stimulus bill. Unemployme­nt remains pervasive throughout the US economy.”

Retail sales jumped 1.9 per cent last month as consumers bought motor vehicles and clothing, dined out and splashed out on hobbies.

That followed an unrevised 0.6 per cent increase in August.

Economists polled by Reuters had forecast retail sales would rise 0.7 per cent in September. Some said September’s surge was likely exaggerate­d by difficulti­es stripping seasonal fluctuatio­ns from the data after the shock caused by COVID-19. Unadjusted retail sales fell 2.8 per cent after dropping 1.0 per cent in August.

Retail sales have bounced back above their February level, with the pandemic boosting demand for goods that complement life at home, including furniture and electronic­s. An aversion to public transporta­tion has boosted motor vehicle purchases. Retail sales rose 5.4 per cent on a year-on-year basis in September.

They account for the goods component of consumer spending, with services such as healthcare, education, travel and hotel accommodat­ion making up the other portion.

Excluding automobile­s, gasoline, building materials and food services, sales increased 1.4 per cent last month after a downwardly revised 0.3 per cent drop in August.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have dipped 0.1 per cent in August.

Economists have attributed the strength in retail sales to fiscal stimulus, especially a weekly subsidy paid to tens of millions of unemployed Americans. September’s robust sales reinforced expectatio­ns for record consumer spending and economic growth in the third quarter.

Growth estimates for the Julyseptem­ber

quarter are as high as a 35.2 per cent annualised rate. That would recoup roughly twothirds of the output lost because of COVID-19. The economy contracted at a 31.4-per cent pace in the second quarter, the deepest decline since the government started keeping records in 1947.

US stocks bounced from three straight days of losses on the retail sales data and Pfizer’s announceme­nt that it could apply for emergency use of its COVID-19 vaccine candidate as early as November.

Last month, sales at auto dealership­s surged 3.6 per cent. Receipts at restaurant­s and bars increased 2.1 per cent. Receipts at clothing stores jumped 11.0 per cent.

“Some of the gain may have reflected increased demand from back to school sales, but with most schools remote learning the reported strength seems dramatic and likely unsustaina­ble,” said Kevin Cummins, chief US economist at Natwest Markets in Stamford, Connecticu­t.

Even with September’s gains, sales at bars, restaurant­s and clothing stores remain well below their pre-pandemic levels. Purchases at electronic­s and appliance stores fell 1.6 per cent.

 ??  ?? People shop at Macy’s Department store in New York City.
People shop at Macy’s Department store in New York City.

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