US Retail Sales, Sept 2019

US Retail Sales Fell 0.3% in September 2019

Contrary to market expectations, US retail sales contracted 0.32 percent MoM in seasonally adjusted terms in September compared to growth of 0.63 percent MoM in August. In annual terms, retail sales grew 4.1 percent YoY in September. The decline in retail sales was mainly driven by contraction in automobile and gasoline sales. Excluding automobiles and gasoline, retail sales otherwise remained flat in September on MoM basis.

The contraction in the retail sales coupled with moderation in job growth reflects subdued consumer spending. This could be a signal that manufacturing weakness has started to spread more broadly across the US economy. The trade war between the US and China—which led to decline in business investment and fears of recession—have made consumers more cautious. It will be worth watching development in this trend over the next few months as consumer spending accounts for 68 percent of the US economy.

Spending in Seven of the Thirteen Major Categories of Retail Sales Decreased in September  

• Auto retail sales contracted 0.9 percent MoM in September compared to 1.9 percent growth in August. This trend is especially noteworthy given tat buyers benefited from lower lending rates.
• Gasoline station sales declined 0.7 percent MoM (-1.3 percent in August).
• Building materials sales fell 1 percent MoM (+2.3 percent in August).
• Nonstore retail sales, a measure of online shopping, shrank 0.3 percent MoM (+1.2 percent in August).
• General merchandise store sales contracted 0.3 percent MoM (-0.2 percent in August).

Select Sectors Remained Strong.  Sales in apparel, health and personal care, and furniture and home furnishings, all grew in September.