Sales at retail stores and restaurants rose just 0.1 per cent from the prior month to a seasonally adjusted $US447.3 billion in October, the Commerce Department said Friday, following two months of flat sales.
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A 0.9 percent drop in the value of sales at service stations, which reflected lower gasoline prices, also helped to restrain retail sales last month.
The readings for September were revised up to show a 0.1 percent gain compared to a previously recorded 0.1 per cent drop.
“The consumer still is sitting on a fair amount of windfall from low gasoline prices”, said Ryan Sweet, a senior economist at Moody’s Analytics Inc.in West Chester, Pennsylvania, who correctly projected the change in sales. September core sales are now estimated to have risen 0.1% m/m (initial: -0.1%) and August results received a modest boost as well. “In both months falling gas prices pushed down overall sales”.
Retail trade sales were virtually unchanged from September 2015, and up 1.2% above a year ago. IHS Economics earlier this month forecasted a 3.5 percent expansion in holiday retail spending this year from 2014, which now seems like a long shot given the rest of the year’s general consumer sluggishness. “I still think the prospects for the holiday season are quite solid”. Over the past 12 months, sales have risen 1.7 percent. Sales at electronics and appliance stores fell 0.4 percent.
The American consumer appears to be tapped out. For the week ending November 8, only 22 percent of Americans said the current state of the economy was “excellent” or even “good”, according to the index.
So far, most inflation gauges remain below that level.
However, sales during the run-up to Christmas will prove to be the real test of consumer confidence. But it’s important to take retail trade numbers, which are influenced heavily by pricing, with a grain of salt.
Retail sales data can be highly volatile from month to month.
But that was barely enough to offset a 0.5 per cent decline in auto sales and motor vehicle parts, along with weaker sales at gasoline stations. There is never been a time where sales have been over 18 million for two straight months.
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Nevertheless, soft inflation and the signs of slowing spending by consumers are not likely to deter the United States Federal Reserve from increasing its benchmark interest rates in December said economists.
