Actual Storms, not economic ones, explain U.S. Retail Sales Dip

By guest author Justin Lahart from Wall Street Journal

A slowdown in U.S. retail sales can be explained by Hurricane Florence, other unseasonable weather and weakness at department stores, not an economic slowdown

Nothing can elicit eye rolls from investors quite like hearing a retailer say that sales were weak because of the weather. Well, sales were weak last month, and the weather had a lot to do with it.

The Commerce Department on Monday said that retail sales at stores and restaurants rose 0.1 % in September from a month earlier—well below the 0.7 % gain economists polled by The Wall Street Journal expected to see. Excluding cars, sales fell 0.1 %.

A lot of that weakness had to do with Hurricane Florence, which crashed into the Carolinas last month, bringing heavy rains and widespread flooding. One of the weakest elements of the retail report was food services and drinking places, where sales slipped 1.8 % from a month earlier. Restaurants and bars are typically the most affected by severe weather since, unlike a planned television purchase that simply gets pushed back, the weekly trip out for dinner tends not to get made up. Gasoline station sales were also weak, which also was probably due in part to Florence.

Department store sales fell by 0.8 %. That is one area of weakness that cannot so easily be attributed to the hurricane. But it might be due in part to the travails of Sears Holdings , which on Monday filed for bankruptcy protection. Sears is much diminished from the retailing giant it once was, but in the first half of its current fiscal year, its merchandise sales were equal to about 6.5 % of U.S. department-store sales.

Still, the underlying trend in retail sales looked strong. Furniture store sales gained 1.1 %, sales at electronics and appliance stores climbed 0.9 % and, despite the challenge of selling fall apparel during an unseasonably warm September, clothing store sales gained 0.5 %. Sales at non-store retailers—a category that includes internet sellers like Amazon.com —rose 1.1 %.

Despite all the obvious angst investors have been feeling lately about interest rates, trade and valuations, the U.S. consumer is one thing they need not worry about.

www.wsj.com