Retail sales account for a large part of consumer spending, which itself is typically the largest segment of GDP in an advanced economy. Changes in retail sales have a large effect on GDP growth rates and thus they are of great interest to economists, policy makers and financial markets.
US retail sales had been robust from September 2017 onwards when annual growth rates started exceeding 5%. There has been the odd exception, such as in January 2018, when the annual growth rate dipped. However, August sales were barely larger than July’s total and now September sales figures have offered a similar lacklustre performance.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales grew by just 0.1% over the month, which is less than the +0.7% expected and the same as August’s 0.1% increase. On an annual basis, sales increased by 4.7%, which is a significant fall from August’s comparable figure of 6.5% after revisions.
Westpac’s Finance AM team described the result as “a big miss” but then went on to sound a lot more positive. “The retail control group, a subset that excludes food services, gasoline, auto and building materials and feeds directly in GDP, rose by a firmer looking +0.5%, in line with expectations net of small downward revisions to the prior month.”