US Retail shows Signs of Life
According to a feature of WSJ Wall Street Journal, evidence is mounting that US retail sales are poised for a rebound following a summer lull
Those purse strings may be loosening again. Retail sales, a closely watched indicator of consumer spending and a key driver of overall growth, have sputtered in recent months following a strong start to the year. That should change Friday when the Commerce Department releases its monthly retail-sales data, which measure everything from traditional stores to restaurants to online retailers.
Economists surveyed by The Wall Street Journal estimate retail sales in September rose 0.6 % from a month earlier. That compares with the 0.3 % decline in August and the July reading of unchanged Predictions for the more representative “control group” also look decent. Items excluding cars, gasoline and building materials, which are often volatile month to month, are expected to have increased 0.3% after falling for two straight months, according to economists at TD Securities.
Part of the recent weakness in retail sales has come from an unlikely source—non-store retailers. This category, which includes internet and catalogue sales and driven largely by Amazon.com Inc., fell 0.3 % in August, the biggest monthly drop since January 2015. Still, non-store retailers, which make up roughly one-tenth of overall retail sales, are up strongly for the year and don’t appear poised for a sustained slowdown sales. It would also exceed the 0.2 % average growth over the past 12 months.
Evidence is mounting that overall retail sales might have picked back up following a summer lull. U.S. consumers were more active last month than in any September since 2008, according to Gallup. The polling firm surveys adults daily on how much they spent the day before, excluding bills or major purchases. Spending also avoided its usual September slump, which Gallup has reported in each of the preceding six years.
A pickup in retail sales reverberates across the economy. It could give companies confidence to boost hiring and increase capital spending, offsetting rising labour costs with higher productivity. Higher spending also matters for markets, likely benefiting growth stocks and hurting some stodgier, bond-like dividend payers that until recently had performed so well.
Strong retail sales helped consumer spending expand at more than double the pace of gross domestic product during the first half of the year. After faltering over the summer, they will likely carry the load through the end of the year, too.