Summary: US retail sales increase for fifth consecutive month; rise nearly triple expected figure; largest monthly rise since September 2017 excluding “wild” gyrations in second quarter; US consumer spending “very strong” at end of Q3; all but one category segments increase sales over month; “vehicles and parts suppliers” the largest influence on total; economists still doubtful of “durability of the rebound”.
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% by the end of that year. 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 has since taken place.
According to the latest “advance” sales numbers released by the US Census Bureau, total retail sales increased by 1.9% in September. The gain was nearly triple the 0.7% increase which had been generally expected and considerably more than the 0.6% rise after revisions in August. On an annual basis, the growth rate increased from August’s revised rate of 2.8% to 5.4%.
“Aside from the wild monthly gyrations in the initial months of the pandemic, this is the largest monthly rise since September 2017,” said NAB currency strategist Rodrigo Catril.
The report was released on the same day as August industrial production numbers and the University of Michigan’s latest consumer sentiment report. US Treasury bond yields were largely unchanged and, by the end of the day, 2-year and 10-year Treasury yields remained unchanged at 0.14% and 0.74% respectively while the 30-year yield finished 1bp higher at 1.53%.
“The data suggest the US consumer remained very strong at the end of Q3 despite uncertainty about additional pandemic stimulus,” said ANZ economist Hayden Dimes.
All but one segment increased sales over the month, with the “Motor vehicles and parts suppliers” segment providing the largest influence on the overall result. Sales in this segment increased by 3.6% over the month. The “Clothing and accessories stores” segment also had a notable influence, with sales in this segment rising by 11.0%.