US retail sales post surprise 0.7% gain in September as consumers spend more


A young customer views Halloween masks. Americans continued to spend at a solid clip in September, despite rising prices and snarled global supply chains limiting the flow of goods. AP

© Marta Lavandier A young customer views Halloween masks. Americans continued to spend at a solid clip in September, despite rising prices and snarled global supply chains limiting the flow of goods. AP

US consumers stepped up spending in September and retail sales posted a surprise 0.7 per cent increase, pushed by broad gains that extended beyond petrol and cars, the government reported on Friday.

The increase, which sent the monthly sales total to $625.4 billion, defied economists’ expectations of a slight decline.

And the Commerce Department revised an increase in August to higher than initially reported – to 0.9 per cent.

Demand for goods has surged as widespread vaccinations have allowed businesses to reopen from the Covid-19 shutdowns. Total sales jumped 13.9 per cent compared to September 2020, according to the report.

But supply bottlenecks have caused price increases and shortages – notably for semiconductors, curtailing car production.

Oil prices have soared above $80 a barrel in recent weeks. Sales at petrol stations jumped 1.8 per cent compared to August and are 38.2 per cent higher than a year ago, the report said.

However, even excluding cars and petrol, retail sales were still up 0.7 per cent in the month, amid solid gains for clothing, food and beverages, and sporting goods, as well online retailers, the report said.

“US household remains rock solid and is the foundation of American economic expansion,” economist Joseph Brusuelas of RSM said on Twitter.

Supply chain issues continue to be felt in the data, and the New York Federal Reserve’s Empire manufacturing index plunged 14.5 points to 19.8 in October, with record high in delivery times and prices near record highs.

However, the future outlook index improved four points to 52.0, the report said.

“Supply, not demand, is manufacturing’s major current problem,” said Oren Klachkin of Oxford Economics.

And he cautioned: “There’s no quick fix to the multiple, simultaneous issues that are presently restraining growth.”

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