October 14, 2016 - 8:36 AM
WASHINGTON - U.S. shoppers stepped up their spending in September, with sharply higher sales at auto dealers, restaurants and gas stations. But the government's retail sales report released Friday also contained some evidence that spending might be slowing.
For much of this year, consumers have spent at a solid pace as income gains have accelerated and the job market has improved. Last month's overall retail sales gain was a decent seasonally adjusted 0.6 per cent. Much of it, though, was due to higher oil prices, which increased how much people spent at gas stations but were not necessarily a sign of stronger consumer spending.
September's overall increase in retail sales marked a rebound from August's sluggish 0.2 per cent gain, the Commerce Department said. During the first nine months of the year, retail sales have increased 2.9 per cent compared with 2015. Increased sales have helped propel economic growth and have offset a diminished U.S. manufacturing base and broader weaknesses in the global economy.
The results were enough to sustain optimism among some analysts.
"This morning's report provides confirmation that the American consumer remains a key driver of economic growth as we slowly approach the very important holiday shopping season," said Michael Dolega, a senior economist at TD Bank.
Higher oil prices drove a 2.4 per cent increase in sales at gas stations last month, though purchases remain down on a year-over-year basis because of previous price declines. Spending at restaurants improved 0.8 per cent in September. Auto dealers, building materials stores and furnishers notched monthly gains of 1 per cent or more.
Department stores suffered a 0.7 per cent sales decline in September, part of a long-term slowdown for the anchor tenants at many shopping malls that increasingly must compete with online outlets. But even online sales were soft. They rose a mere 0.3 per cent in September, compared with recent monthly gains averaging nearly 1 per cent.
Some analysts took a more downbeat view of retail sales, noting that corporate profits are being squeezed. And there are signs of fragility: Excluding motor vehicles and gasoline, sales rose just 0.3 per cent in September after being flat in August and declining 0.2 per cent in July.
"We continue to believe that pressure on corporate profit margins will spur aggressive cost-cutting measures which will increasingly impinge on the pace of job growth through the course of next year," said Joshua Shapiro, chief U.S. economist at the consultant MFR. "We therefore feel that the consumer is unlikely to be able to sustain a substantial 'engine of growth' role as we move through 2017."
Consumer spending, which accounts for about 70 per cent of economic activity, increased at a 4.3 per cent annual rate in the April-June quarter. That increase fueled much of the overall estimated annualized economic growth rate of just 1.4 per cent during the April-June quarter.
Employers added 156,000 jobs in September. Unemployment ticked up to 5 per cent because more people — drawn by recent job growth— began looking for work.
In September, average hourly pay rose 6 cents to $25.79 and is now 2.6 per cent higher than it was a year ago. The pace of wage growth has strengthened in recent months, with pay rising at only about 2 per cent annually for much of the seven-year recovery from the Great Recession.
News from © The Associated Press, 2016