September retail sales show growth, according to Commerce and NRF
October 15, 2012
In a positive development for the United States economy, September retail sales saw decent growth, according to data from the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that September retail sales at $412.9 billion were up 1.1 percent compared to August and up 5.4 percent compared to September 2011. This monthly gain tops the 0.9 percent jump from July to August and is the largest monthly gain in seven months, according to Commerce data. Total sales for the July through September period were up 4.8 percent annually.
The NRF reported that September retail sales, which exclude autos, gas stations, and restaurants, were up 0.4 percent on a seasonally-adjusted basis from August and up 2.1 percent on an unadjusted basis annually.
“With recent data painting a more optimistic view of consumer confidence, we can finally see some light at the end of the tunnel,” NRF Chief Economist Jack Kleinhenz said in a statement. “While the latest retail sales data indicates continued improvement for the economy, increasing gas prices and the looming fiscal cliff still pose serious challenges to the momentum we’ve seen in consumer spending.”
Even with the aforementioned headwinds cited by Kleinhenz, there have been other positive economic signals, too, including improving consumer confidence data, as well as encouraging automotive sales and housing data.
But these developments have yet to translate into meaningful freight volume growth, as trucking volumes remain mostly flat, and railroad volumes are slightly down, while intermodal continues to grow and ocean capacity remains abundant in most cases.
As many economists continue to point out, higher job growth levels have the potential to boost retail sales—and overall—economic growth. But even with employment data showing some gains, it is still not yet occurring at a rate that has a meaningful impact on retail sales growth. This was made apparent by Commerce’s recent release that GDP growth for the third quarter is expected to come in at 1.9 percent.
Along with positive retail sales growth, the possibility of an East and Gulf Coast ports strike, due to an ongoing stalemate between the International Longshoremen Association and the United States Maritime Alliance over a new labor contract was thwarted, when the sides agreed in September to a 90-day extension to hash out their differences and get a new contract in place. The NRF and other concerns had stated that should a strike occur it could have thrown a wrench in supply chain and logistics planning for retailers with holiday shopping season quickly approaching.
As LM has reported, retail sales largely show slow and incremental growth, while continued growth is needed over a longer period, as consumer spending accounts for roughly 70 percent of U.S. economic activity. And while retail growth is relatively slow still, signals remain intact that the economy is showing some signs of recovery, with consumer confidence on the upswing to a large degree declines in gasoline prices over the last two months.
The continuing trend of slight or flat sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
Shippers and carriers at this month’s Council of Supply Chain Management Professionals Annual Conference in Atlanta said that retail-related volumes are for the most part following traditional seasonal patterns, with a caveat being that more products are being shipped earlier in the year, although October is still widely expected to be the peak month of the year for volumes like it usually is.
“This could be a bit of that ‘pent-up’ demand we know is there finally seeping-out a bit,” said Charles “Chuck” Clowdis, Managing Director, North America Global Commerce & Transport Advisory Services, at IHS Global Insight. “Consumers are seeing things they want, especially in the new electronics being unleashed, so that sending’s addiction has been unloosed. Let’s just hope that these purchases are being made wisely, by consumers who are employed and not putting these purchases on their ‘plastic’ again.”
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