US retail sales beats estimates in September

Summary:  US retail sales rise by 0.7% in September, contrasts with -0.3% expected; report “encouraging” but impact of consumption on Sep quarter GDP less than in June quarter; rises in all retail categories except two; “general merchandise” segment” the largest single influence, rises 2.0%.

US retail sales had been trending up since late 2015 but, commencing in late 2018, a series of weak or negative monthly results led to a drop-off in the annual growth rate below 2.0%. Growth rates then increased in trend terms through 2019 and into early 2020 until pandemic restrictions sent it into negative territory. A “v-shaped” recovery then took place which was followed by some short-term spikes as federal stimulus payments hit US households in early 2021.

According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 0.7% in September. The rise was in contrast to the 0.3% decline which had been generally expected but not quite as large as August’s 0.9% increase after it was revised up from 0.7%. On an annual basis, the growth rate slowed from August’s revised figure of 15.4% to 13.9%.

US Treasury bond yields rose on the day. By the close of business, the 2-year Treasury yields had added 3bps to 0.39%, the 10-year yield had gained 5bps to 1.57% while the 30-year yield finished 2bps higher at 2.04%.

“Overall, the retail sales data were encouraging although real private consumption will have contributed significantly less to GDP in Q3 than in Q2,” said ANZ Head of Australian Economics David Plank.

All except two of the categories recorded higher sales over the month. The “General merchandise” segment provided the largest single influence on the overall result, rising by 2.0% for the month and by 13.2% for the year. Sales at petrol (“gasoline”) stations also had a significant influence on the total, rising by 1.8%.

The non-store segment includes vending machine sales, door-to-door sales and mail-order sales but nowadays this segment has become dominated by online sales. It now accounts for a bit over 14% of all US retail sales and it has become the second largest segment after the vehicles and parts segment. On annual basis, sales were 10.5% higher.

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