WASHINGTON, Oct. 15 (BNA) US retail sales rose unexpectedly in September, driven in part by a jump in car dealer receipts due to higher car prices, but there are concerns that supply restrictions may disrupt the holiday shopping season amid continuing. shortage of goods.
The Commerce Department said Friday that retail sales rose 0.7% last month. August data was revised higher to show retail sales increasing 0.9% instead of 0.7% as previously reported. Reuters reported that last month’s sales rose in part on higher prices, with inflation rising strongly in September.
Economists polled by Reuters had expected retail sales to decline 0.2%. An ongoing global shortage of microchips is forcing automakers to cut production, leading to a scarcity of inventory in showrooms, boosting prices and limiting options for buyers. There is also a shortage of other goods amid congestion in the ports due to the scarcity of workers.
“The strong retail sales report reflects consumer resilience and higher prices,” said Sal Gutierre, chief economist at BMO Capital Markets in Toronto. “The main concern now is that supply chain disruptions and microchip shortages appear to be spreading, limiting choice and reducing demand for goods.”
US President Joe Biden announced Wednesday that the Port of Los Angeles will join the Port of Long Beach, two of the nation’s busiest airports, in expanding round-the-clock operations to offload an estimated 500,000 containers on sea freight vessels.
Spending has shifted to goods from services over the course of the COVID-19 pandemic, straining supply chains. The rotation of returning to services, such as travel and eating out, has slowed due to the resurgence of coronavirus infections over the summer, driven by a delta variable.
Retail sales consist mostly of goods, with services, including health care, education, travel and hotel accommodation, making up the remainder of consumer spending. Restaurants and bars are the only service category in the retail sales report.
In September, sales at car dealerships surprisingly rose 0.5% after declining 3.3% in August. With unit sales declining, the increase in receipts will likely reflect higher prices amid severe shortages. The average price of a new car topped $45,000 for the first time ever in September, according to a report this week from Kelley Blue Book, a California auto appraisal and research firm.
Online retail sales rose 0.6% after rebounding 5.7% in August. Sales at clothing stores jumped 1.1%. More workers are back in offices after the Labor Day holiday and may need a new wardrobe after more than a year of working from home due to the pandemic.
Receipts at building materials stores increased 0.1% and furniture outlets increased 0.2%. There was also an increase in receipts from sporting goods, hobbies, musical instruments, and bookstores. With coronavirus infections waning, traffic to restaurants and bars increased, boosting sales by 0.3%.
But sales at electronics and hardware stores fell 0.9%.
Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.8% last month after an upwardly revised 2.6% increase in August. These so-called core retail sales are closely aligned with the consumer spending component of GDP. It was previously estimated to have risen 2.5% in August.
Economists believe consumer spending, which accounts for more than two-thirds of US economic activity, nearly stalled in the third quarter after a solid 12.0% annual growth rate in the April-June period. Estimated consumer spending growth for the third quarter is 2.0%.
The slowdown in consumer spending also indicates that GDP growth slowed sharply in the July-September quarter from the second quarter’s pace of 6.7%. The Atlanta Federal Reserve expects the economy to grow at an average rate of 1.3% in the last quarter.
The government will publish a snapshot of third-quarter GDP growth at the end of this month. Some of the expected slowdown in growth reflects vanishing stimulus from the trillions of dollars in pandemic relief from the government.
With huge savings and a tight labor market boosting wages, the foundation of the economy and consumer spending is solid. The savings rate rose 10.5% in the second quarter. There were 10.4 million jobs at the end of August.
“Of course, strong job gains and a higher savings rate for consumers should provide an arsenal of cash available to spend after what appears to be a pause in the third quarter as the delta variable spreads and the financial economic impact payments fade,” said Kevin Cummins. , chief US economist at NatWest Markets in Stamford, Connecticut.
NS