Abu Dhabi, UAEWednesday 21 October 2020


US retail sales rise at fastest pace in three months

The economy’s rebound from the pandemic-driven downturn is threatened by delay in fresh stimulus

A display of Christmas trees stands next to holiday knick-knacks on display in a Macy's department store. AP Photo
A display of Christmas trees stands next to holiday knick-knacks on display in a Macy's department store. AP Photo

US retail sales rose in September at the fastest pace in three months, topping forecasts and capping a third-quarter rebound for consumer spending that faces increasing headwinds.

The value of overall sales increased 1.9 per cent from the prior month after a 0.6 per cent gain in August, Commerce Department figures showed Friday. The median estimate in a Bloomberg survey of economists called for a 0.8 per cent gain. Excluding autos and gasoline, sales rose 1.5 per cent.

Yields on 10-year Treasuries jumped following the report, while US stock futures extended gains.

The broad-based gain may partly reflect consumers tapping elevated savings, with demand also supported by temporary extra jobless benefits and continued hiring. The economy’s rebound from the pandemic-driven downturn is threatened, though, by a new acceleration in coronavirus infections and Congress’s failure to agree on a fresh stimulus package, developments that appear to be weighing on an already-slowing labor market recovery.

While the $600 weekly payments for jobless Americans expired in July, a temporary program authorised by President Donald Trump provided most benefit recipients about $300 extra a week for a limited time. But funding for that program is dwindling, and the broader dropoff in payments risks a hit to future consumer spending.

All but one of the 13 major categories increased in September, led by clothing, sporting goods and motor vehicles. The only sector to decline was electronics and appliance stores.

So-called control group sales -- which some economists see as a more reliable gauge of underlying demand -- increased 1.4 per cent from the prior month, also exceeding forecasts. That figure excludes food services, car dealers, building-materials stores and gasoline stations.

With the pandemic has also come a shift in consumption patterns. Total retail sales have surpassed their February level but several industries -- including restaurants, clothing and electronics and appliance stores -- remain below year-earlier levels. Instead, consumers are spending more at grocery stores, online vendors and building material retailers.

Excluding automobiles, retail sales rose 1.5 per cent, following 0.5 per cent in August.

While consumer goods spending on the whole has rebounded to a new high, total outlays, which include both goods and services, lag behind February levels as the pandemic continues to hamper activities such as travel. The Commerce Department will release the September figures for personal spending on October 30.

Updated: October 16, 2020 05:45 PM

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