September Retail sales were unchanged, falling short of market forecasts for a 0.2% m/m increase. In August, sales were revised to 0.4% higher (vs. 0.3% previously reported).
September Retail Sales Report
Auto and parts dealer sales fell 0.4% month on month after increasing 2.8% month on month in August. A 1.4% decline hampered today’s report on gasoline station revenues. Building materials and garden equipment sales were down 0.4% m/m.
Retail sales in the “control group,” which excludes vehicles, petrol stations, and construction supplies and is used to estimate personal consumption expenditures, increased by a solid 0.4% month on month.
Department store sales increased (+0.7% m/m), while health shops, apparel stores, and non-store merchants all increased by 0.5% m/m. Food and beverage retailers followed closely behind with a 0.4% m/m increase.
In the report, food services and drinking establishments, the sole services sector, increased by 0.5% m/m in September.
Miscellaneous store merchants (-2.5% m/m) and furniture & electronics/appliance shops (-0.7% m/m) both reported losses in September.
September Retail Sales: Important Implications
The third quarter increased by 2.6% (annualized) with last month’s sales, which was more than predicted. When price impacts are removed, this equates to a 2.0% quarterly annualized loss. Consequently, we now project personal consumer expenditures in Q3 to be somewhat less than 1% (annualized).
Consumers may face further challenges as the Christmas season approaches. Several factors will impact retail sales in the next few months.
For starters, rising inflation will drive people to avoid purchasing more costly and discretionary things. Second, the cumulative impact of tighter financial conditions will become a more powerful impediment. Finally, yearly adjustments to National Accounts published on September 29th indicate that consumers have around 25% less spending power in the form of surplus savings than we projected in our prior analysis. These variables, taken together, imply that the fourth-quarter recovery in real durables expenditure will be half of what we predicted in September.
Featured Image- Megapixl @ Arturszczybylo
Author Okoro Chinedu 
