U.S. shoppers pick up spending in Sept.
Retail sales gain 0.6%, but signs of caution emerge
WASHINGTON — U.S. shoppers stepped up their spending in September, with sharply higher sales at auto dealers, restaurants and gas stations. But the government’s retail sales report released Friday also contained some evidence that spending might be slowing.
For much of this year, consumers have spent at a solid pace as income gains have accelerated and the job market has improved. Last month’s overall retail sales gain was a decent seasonally adjusted 0.6 percent. Much of it, though, was due to higher oil prices, which increased how much people spent at gas stations but were not necessarily a sign of stronger consumer spending. In the first nine months of 2016, retail sales have increased 2.9 percent compared with ’15.
September’s overall increase in retail sales marked a rebound from August’s sluggish 0.2 percent gain, the Commerce Department said. During the first nine months of the year, retail sales have increased 2.9 percent compared with 2015. Increased sales have helped propel economic growth and have offset a diminished U.S. manufacturing base and broader weaknesses in the global economy.
“This morning’s report provides confirmation that the American consumer remains a key driver of economic growth,” said Mi- chael Dolega, a senior economist at TD Bank.
Higher oil prices drove a 2.4 percent increase in sales at gas stations last month, though purchases remain down on a year-over-year basis because of previous price declines. Spending at restaurants improved 0.8 percent in September. Auto dealers, building materials stores and furnishers notched monthly gains of 1 percent or more.
Department stores suffered a 0.7 percent sales decline in September, part of a long-term slowdown for the anchor tenants at many shopping malls that increasingly must compete with online outlets. But even online sales were soft. They rose a mere 0.3 percent in September, compared with recent monthly gains averaging nearly 1 percent.
Some analysts took a more downbeat view of retail sales, noting that corporate profits are being squeezed. And there are signs of fragility: Excluding motor vehicles and gasoline, sales rose just 0.3 percent in September after being flat in August and declining 0.2 percent in July.
“We continue to believe that pressure on corporate profit margins will spur aggressive cost- cutting measures, which will increasingly impinge on the pace of job growth through the course of next year,” said Joshua Shapiro, chief U.S. economist at consultant MFR. “We therefore feel that the consumer is unlikely to be able to sustain a substantial ‘ engine of growth’ role as we move through 2017.”
Consumer spending, which accounts for about 70 percent of economic activity, increased at a 4.3 percent annual rate in the April-June quarter. That increase fueled much of the overall estimated annualized economic growth rate of just 1.4 percent during the April-June quarter.