US retail sales flat in September
US retail sales were flat on the month in September as inflation and rising interest rates dented demand, according to figures released on Friday by the Commerce Department.
Economists had been expecting retail sales to edge up 0.2%, following an upwardly-revised 0.4% jump in August.
Excluding autos, gasoline, building materials and food services, control group sales rose 0.4% last month. This was ahead of consensus expectations for a 0.3% increase.
Andrew Hunter, senior US economist at Capital Economics, said: "With retail sales unchanged in September there is still little evidence that the boost to purchasing power from the earlier sharp fall in gasoline prices has helped real consumption.
"Energy prices are now edging higher again and employment growth is slowing, so we expect consumption growth to weaken further over the coming months."
Although the 0.2% increase was ahead of Capital Economics’ forecast for a small fall, Hunter said the data still suggest that spending growth was weak last month.
"The 0.4% m/m fall in motor vehicle sales came despite the near-3% rebound in unit sales reported by manufacturers. Declines in spending on furniture, electronics, building materials and leisure goods are consistent with the surge in interest rates starting to take a bigger toll on discretionary consumption. The more modest 0.5% rise in spending at bars and restaurants suggests overall services spending growth weakened too."
Hunter said he still expects consumption growth over the third quarter as a whole to have slumped to only 0.7% annualised and, with the impact of the Fed’s aggressive tightening still feeding through, he suspects growth will be even weaker in the fourth quarter.