Retail Sales Surprise in September, but Caution Lingers
Apparel showed signs of weakness last month and the underlying sales trend is slowing.
Between the strong job market and the last few pennies in all the pandemic piggy banks, consumers have money to spend and doled it out at a surprising rate last month.
But with inflation hanging on, student loan repayments looming and continued economic worries, they aren't necessarily ponying up for the latest fashions. And the underlying sales trend is slowing.
The Census Bureau said September retail and food service sales rose a seasonally adjusted 0.7 percent from August. That put the consumer market well ahead of the 0.3 percent gain economists projected, according to FactSet.
September sales rose 3.8 percent from a year earlier. And sales in August were revised higher, strengthening the picture further.
Jack Kleinhenz, chief economist at the National Retail Federation, said: “Firm payroll growth over the past few months has likely helped spending across retail sectors. However, much of the rise was due to car sales, gasoline prices and food services. When you exclude those categories and look at core retail as measured by NRF, the pace of year-overyear growth is slowing.”
The NRF's preferred measure of sales showed year-over-year gains of a slower 2.2 percent, down from growth of 3.6 percent in August.
September apparel and accessories store sales inched up 0.1 percent from a year earlier, while department stores logged a 4.7 percent decline.
Neil Saunders, managing director of GlobalData, said: “Unseasonably warm weather across many parts of the country also meant that heavier winterwear had a very slow start to the season, with items like coats and sweaters moving very slowly at most retailers. This, in turn, led to more discounting, which also diminished growth.”
While overall spending surprised to the upside, the consumer landscape seems to only become more complicated going forward.
“The September numbers do not reflect the resumption of student loan repayments, which only kicked in during October,” Saunders said. “Nor do they reflect the deterioration in confidence that started at the end of September. Nor do they contend with the whittling down of excess savings built up during the pandemic, which will hit mostly during October and November.”
“All these downside factors point to a more marked slowdown as the year closes out,” he said.
Consumers have been able to steadily surprise experts with their spending this year — but how long can they hold out?