Department of Commerce and NRF data show slowing September retail sales

United States retail sales for the month of September posted slight sequential gains, the annual gains coming in higher, according to data issued today by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that September retail sales, at $509.0 billion, were up 0.1% compared to August and posted a 4.7% annual gain. And it said that total retail sales from July through August saw a 5.9% annual gain.

September retail trade sales headed up 4.4% annually, with gasoline stations up 11.4%, and non-store retailers, which include e-commerce sales, rose 11.4%.

NRF data showed a 0.4% annual increase from August to September on a seasonally-adjusted basis and a 3% annual gain on an unadjusted basis. NRF’s numbers do not include automobiles, gas stations, and restaurants.

On a three-month moving average through September, retail sales rose 4.5%.

“Retail sales were somewhat softer than expected in September and some of the weakness can be attributed to Hurricane Florence and geopolitical trade concerns,” NRF Chief Economist Jack Kleinhenz said in a statement. “Recent solid wage gains and other fundamentals continue to propel spending, which has been supported by tax cuts, saving and access to credit. Today’s numbers confirm an underlying strength in the industry and a solid trajectory as we go into the fourth quarter.”

NRF reported annual gains in the following categories:
-Online and other non-store sales were up 8.9 percent unadjusted year-over-year and up 1.1 percent seasonally adjusted from August;
-Electronics and appliance stores sales were up 4.6 percent unadjusted year-over-year and up 0.9 percent seasonally adjusted from August;
-General merchandise stores sales were up 3.5 percent unadjusted year-over-year and up 0.3 percent seasonally adjusted from August;
-Clothing and accessories stores sales were up 3.1 percent unadjusted year-over-year and up 0.5 percent seasonally adjusted from August; and
-Food and beverage stores sales were up 2.1 percent unadjusted year-over-year and up 0.2 percent seasonally adjusted from August, among others

In a research note, James Bohnaker, Associate Director, IHS Markit, pointed to concerns regarding retail sales activity in advance of the holiday shopping season (the months of November and December).

“Despite mostly solid economic tailwinds, several developments in the last couple weeks have caused us to temper our outlook for the holiday shopping season,” he wrote in a research note. “First, rising gasoline prices—now at over $2.90/gallon on average in the US—will likely rattle some consumers if they continue rising above $3/gallon heading into the holiday shopping season, which looks increasingly likely. Shoppers have gotten used to having extra money in their bank accounts as a result of the 2018 tax cuts, but that stimulus would be largely diffused by rising gas prices.”

And he also pointed out that the recent selloff in equity markets will likely cause consumers to think twice about additional discretionary spending, especially if market turbulence becomes routine over the next few weeks. He explained that this is more likely to disrupt spending on luxury retail items and other big-ticket purchases, since higher-income households are more sensitive to swings in the stock market.

“As a result of these adverse developments, we have revised down our outlook for holiday retail sales growth from 5.0% to 4.7%,” he wrote. “This would still be a solid year for retailers but a step back from the growth of 5.3% last year. We define holiday retail sales as not-seasonally-adjusted November plus December total retail sales excluding automobile dealerships, gasoline stations, and food services.”