US September Retail Sales Rise 0.8% MoM, Beating Expectations; Gas Stations Account for About 70% of the Increase

Stock News10-15

Data released by the US Department of Commerce on Thursday showed that US retail sales in September totaled $745 billion, up 0.8% month-on-month, exceeding the market expectation of 0.3%, and up 6.3% year-on-year. The Department of Commerce also revised the August month-on-month increase upward from 1.1% to 1.3%. Excluding auto and gasoline sales, September retail sales rose 0.2% month-on-month. The increase was highly concentrated in energy and dining out.

Broken down by category, of the roughly $5.7 billion month-on-month increase in September, gas stations contributed about $4.1 billion, accounting for approximately 71%; food services contributed about $1 billion, accounting for approximately 18%, with the two combined making up about 90% of the increase. Gas station sales in September rose 6.4% month-on-month and 28.1% year-on-year. Excluding autos and parts and gas stations, retail sales rose only 0.2% month-on-month and 5.0% year-on-year, indicating that apart from price-driven energy spending, the momentum of other consumer spending was relatively moderate. Among the categories, autos and parts rose 0.2% month-on-month and 2.6% year-on-year; non-store retailers (including online shopping) rose 0.3% month-on-month and 8.2% year-on-year; food services rose 1.1% month-on-month and 7.0% year-on-year.

Retail sales are nominal figures and do not exclude price changes, so the boost to nominal sales from higher energy prices does not equate to real consumption growth. Inflation and consumption data were both stronger in tandem. September CPI, released the previous day, rose 3.7% year-on-year, while core CPI rose 2.6%, both above market expectations; September PPI, released the same day, rose 6.3% year-on-year, also above the expected 5.3%. According to the CME "FedWatch" tool, the probability that the Federal Reserve will keep rates unchanged in October is 66.8%, while the probability of a 25-basis-point hike is 33.2%, up from 22.1% the previous day; the probability of at least a cumulative 25-basis-point hike by December is close to 90%. The Federal Reserve already raised its policy rate by 25 basis points to 3.75%—4.00% on September 16.

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